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Since 1st March, 1999
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Titans square off over power dues

Mumbai/Delhi, June 15: The country’s largest corporate titans are at war.

The Tatas have accused Reliance and the Central Electricity Authority (CEA) — a government policy-making entity — of deliberately suppressing a commercial relationship between them in order to enable Ambani-owned Reliance Energy to win a key legal battle with Tata Power before the Maharashtra Electricity Regulatory Commission (MERC).

The CEA had been asked to advise the MERC in a dispute between the two power utilities over power charges.

It ruled in favour of Reliance Energy — and the MERC had ordered Tata Power to refund Rs 322 crore to Reliance Energy and Rs 58 crore in unpaid standby charges to the Maharashtra State Electricity Board (MSEB).

But the Tatas are now crying foul. In a sworn affidavit filed before the Bombay High Court, the Tatas questioned the neutrality of the government agency in the dispute before MERC.

Tata Power has claimed that an order recently passed by the MERC was based on the CEA report “which is completely biased”.

The petition, filed by Tata Power’s company secretary B. J. Shroff, said the CEA’s report was “merely adopted by MERC while passing the impugned order (and) is not a report of an independent body”.

TPC’s grouse is that Reliance Energy had appointed CEA to provide engineering consultancy Services for installation of a flue-gas de-sulphurisation plant at the power utility’s Dahanu thermal power station for an estimated fee of Rs 55 lakh.

In an order dated May 31, 2004, MERC had sought to settle the long-drawn dispute between Tata Power Company and Reliance Energy on sharing of standby charges of Rs 33 crore per month, payable to MSEB.

The state power regulator has ruled that for the six-year period from FY99 to FY04, TPC has to refund Reliance Energy Rs 322 crore and pay Rs 58 crore towards unpaid standby charges to MSEB. TPC has been asked to share 77-79 per cent of the standby charges and REL 21-23 per cent.

A standby facility is used by a generating utility to augment supply when one of the generating units are down. While trying to determine the sharing of the burden of stand-by charges, MERC had sought the advice of the Central Electricity Authority (CEA).

“Tata Power moved the Bombay High Court today, seeking a stay on MERC order on standby charges, but did not get it. The matter has been adjourned to June 22,” a Reliance Energy spokesperson said. “We will make appropriate submissions before the court in response to today’s Tata Power petition challenging MERC’s order,” he added.

In Delhi, CEA chairman H. L. Bajaj said: “The CEA was given the engineering consultancy by BSES when it was controlled by the central government and financial institutions controlled by it. There is no question of bias or favour.”

“If Tata Power had no faith in CEA, it would not have agreed to a memorandum of understanding with us for a consultancy to examine the feasibility of a 2X500 megawatt thermal power in Uttar Pradesh. This was agreed only last week. Senior TPC executives, Anil Sardana and R. K. Nair, agreed to the project with CEA member in charge of thermal projects, R. K. Jain,” he added.

Sources reveal that with the high court declining to grant the stay, TPC will have to cough up Rs 322 crore and pay Rs 58 crore immediately to REL and MSEB.

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