Non-transfer of land likely to hit Reliance Infra, Adani Electricity deal

A group of consumers is questioning the non-transfer of land parcels with the distribution business to Adani Electricity Mumbai, the new operator

Anil Ambani-promoted Reliance Infrastructure (R-Infra) may need to answer a new set of questions on its Mumbai distribution business sale as some consumers seek a right to appeal against the deal at the Appellate tribunal. The consumer groups wants land parcels to be transferred along with the distribution business to Adani Electricity Mumbai, the new operator.

RInfra acquired the Mumbai distribution business from the state utility BSES Ltd in 2003 and as part of the acquisition, land parcels measuring 15,514 square metres were also transferred to RInfra. At present, Anil Ambani's Reliance group headquarters stands on the said land parcel.

A group of consumers have approached to the Appellate Tribunal of Electricity (APTEL) to be given permission to file an appeal on the deal in relation to the non-transfer of land parcels. In August, RInfra completed the sale of its Mumbai distribution business which valued the business at Rs 121 billion. An email query sent to Adani Electricity on Monday remained unanswered.

"MERC (Maharashtra Electricity Regulatory Commission), has considered all the matters and issues including relating to the said plots in relation to the transfer of licenses of distribution and transmission businesses and post public hearing issued its Orders for transfer of licenses. These Petitions are pending for admission and the matter is sub-judice, hence we as a policy cannot comment on the same," said a Reliance Infrastructure spokesperson.

The plea was to be heard at the APTEL on Monday, which was adjourned at the request of R Infra seeking to file a reply to the consumer group's application, said Anand Varma, managing partner at APT Legal, who is representing one of the the consumer groups at APTEL. "There are 2 appeals filed by consumers against the MERC order (clearing the deal) on the aspect of the four  plots of land being retained by Reliance Infra," he added.

"A group of consumers have raised concerns on the non- transfer of the four land parcels which came to RInfra with the deal with BSES and which also houses the ADAG headquarters. The land was transferred to Rinfra for administrative purposes and setting up sub stations if required," said Anand Varma, managing partner at APT Legal, who is representing this group at APTEL. Varma added, "In future if Adani Electricity needs to expand the distribution business in Mumbai it will have to rent or buy new land which will increase tariff costs."

Concerns of a similar kind were raised during the public hearing at the Maharashtra Electricity Regulatory Commission (MERC) before granting a clearance to RInfra for the deal.  According to the public notice RInfra published in May this year sharing details on the deal, R Infra said, "The four land parcels at Santacruz, which are currently part of the asset base of licensed distribution business, are proposed to be retained by RInfra at a consideration of Rs 2.5 Billion." The value, the company said, has been arrived at based on the ready reckoner rates prescribed by the Maharashtra Government for the year 2017-18.

"The users (who are seeking to file a plea with APTEL) are different from those who appealed with MERC when R-Infra was seeking a clearance for the deal. However, MERC clearance was given based on a ready reckoner rate used for the land parcel value, which will not be a fair value," Varma added.

MERC approved the deal in June this year and in its order, the commission added, "REGSL will have to manage not only the office requirement but also the residential quarters/leased accommodation, within the proceeds of Santacruz property, once RInfra is allowed to retain the plots". This condition is essential as both the parties have given the undertaking that this transaction will not have any adverse implication on tariff." Reliance Electric Generation and Supply (REGSL) is the entity which housed the Mumbai distribution business and RInfra had proposed to sell a 100% stake in this entity to Adani Transmission.