Tatas, REL set to lock horns again

At present, the Tatas supply around 500 mw of infirm power (which can be discontinued anytime as it is not legally binding) to the Anil Ambani group company, the largest power supplier in the island city with 27 lakh consumers.

Sources close to both companies admitted that the Tatas could withdraw power supply to Reliance Infra if it requires power for its own distribution.

When contacted, executives from both companies declined to comment on the issue.

On Tuesday, the apex court upheld the Tatas' right to supply power in areas that are catered by Rel Infra, which supplies 1,250 mw to suburbs between Kurla and Chembur and Bandra and Dahisar. Tata Power has generation capacity of 1,777 mw, while Rel Infra generates 500 mw from its Dahanu plant. However, the city's demand varies from 2,800 mw to 3,500 mw.

The private power giants have been sparring over the PPA for the last 10 years on various issues such as time frame and quantity of power. "Rel Infra is not ready to sign the agreement for 10-year period since the company plans meet its distribution requirement by doubling the capacity of its Dahanu plant.

Moreover, the Tatas are not willing sign PPA for 762 mw, which is being demanded by Rel Infra, and are ready to release 500 mw instead," said the sources.

"If Tata Power snaps the supply to Rel Infra, the latter will have to purchase power at a double cost (Rs 15). The buyers of Rel Infra will have to shell out more for electricity," said an industry expert.

Apart from the 250 mw capacity addition in Trombay, which will begin from October this year, there are no other major additions in the pipeline for the Tatas in the next two years for Mumbai.

The 500-mw expansion plan of Rel Infra to double the capacity at Dahanu is yet to get the nod from the Dahanu Taluka Environment Protection Authority (DTEPA) and other regulatory agencies. The company expects the additional power to go on stream in three to four years.

Tata Power, meanwhile, has a surplus of just 500 mw for the PPA. It has signed a PPA with BEST, the government-owned power distributor, for supplying 800 mw. Over that, the company distributes 477 mw at its licensed area as a bulk supplier to industrial consumers.

"Our immediate plan is to service the consumers in the areas around our existing substations. Further, our priority network expansion plan would focus towards growing areas as well as areas not adequately served at present," said Tata Power in a statement.