Financial Daily from THE HINDU group of publications
Wednesday, Jun 02, 2004
Financial Daily from THE HINDU group of publications Wednesday, Jun 02, 2004 |
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Maharashtra Corporate - Corporate Disputes Industry & Economy - Power MERC ruling — Tata Power asked to refund Rs 322 cr to Reliance Energy Our Bureau
Mumbai , June 1 THE Maharashtra Electricity Regulatory Commission on Tuesday ruled that Reliance Energy Ltd need not bear in equal proportion with Tata Power, standby charges of Rs 33 crore payable to the MSEB every month. The MERC has ruled that for the six-year period FY 99 -04, Tata Power has to refund REL Rs 322 crore and pay Rs 58 crore towards unpaid standby charges to the MSEB. Tata Power, in a statement, said it would contest the order in the Mumbai High Court. REL also issued a statement claiming it would have to receive a total refund of Rs 373 crore from TPC towards excess payments of standby charges. It said that the order recognised that TPC would have to bear the delayed payment charges and interest on arrears payable to the MSEB on standby charges because "REL was in no way party to the agreement between TPC and the MSEB" on the standby issue. Standby charges are payable to the Maharashtra State Electricity Board towards making available a back-up or reserve power for Mumbai in case of any fault in the city's power distribution systems. While TPC avails standby from the MSEB, Reliance, which buys power from TPC, benefits indirectly. The order is one among numerous orders passed by MERC, Mumbai High Court and even the Supreme Court on the long standing dispute between two of Mumbai's leading private sector power distribution companies Tata Power and Reliance Energy Ltd on whether both companies should bear standby charges in equal proportions. MERC has said that the two companies TPC and REL share 77/79 per cent of the standby charges while REL to share 21/23 per cent of the amount payable to the MSEB. Tata Power said in its release that the Government of Maharashtra, High Court of Mumbai and the Supreme Court had earlier agreed that standby capacity be shared 50:50 between TPC and REL. The CEA had recommended that standby charges should be in the ratio of 77 per cent to TPC and 23 per cent to REL.
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