R-Infra to evaluate MERC's EoI notice, seek legal advice

A day after the state electricity regulator invited Expressions of Interest (EoIs) from interested parties for distributing electricity in Reliance Infrastructure's (R-Infra) licensed area, the company today said there is no provision in electricity law for bidding.

R-Infra, in a press statement, said that as per the electricity laws, there was "no provision" in it for bidding of the licence (for distributing power) since the Commission is enabled to grant as many licences to eligible applicants to promote competition.

The Maharashtra Electricity Regulatory Commission (MERC) has invited EoIs from interested parties to supply power in the suburbs of Mumbai, as the company's licence expires on August 15, 2011.

"The notice could be to estimate interest among the applicants and thereafter, those who prima-facie meet the criteria, will be directed to follow the procedure prescribed under section 15 for grant of a licence," it said.

"It is not clear why EoI notice is linked with the term of R-Infra licence period. It is also not clear that while granting BEST a distribution license on April 2, 2007, almost four years after the enactment of Electricity Act 2003, why such a procedure was not followed. Instead, the procedure was waived then," the R-Infra statement said.

As per the law, on termination of the licence period by efflux of time, the ownership of the assets remains with the licensee, it said.

In this case, the Commission had approved the assignment of distribution licence and transfer of assets in distribution system in the suburbs of Mumbai in favour of R-Infra.

"R-Infra will apply for extension of its license period at appropriate time and will continue to use assets owned by it to meet its license obligations," the release said.