The Maharashtra government has directed the Mumbai-based power company BSES to pay the other city-based power undertaking, Tata Electric Companies (TEC), Rs 3.5 crore per month as standby charges.
The government issued an order to this effect on January 19, 1998. This was confirmed by sources at BSES as well as TEC. This brings an end to the long-standing row between the two power companies.
The order will result in additional outgo of Rs 42 crore annually for BSES. The order which comes into effect from January 26 will not have any effect on the BSES bottomline.
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Sources at BSES said that this was because the effect of such a payment had already been factored in the last tariff revision in March, 1997.
TEC too which had been demanding about Rs 148 crore as standby charges has decided to comply with the order. We, too, decided to accept because of the BSES argument that there should be no effect on tariff, said a senior TEC official.
TEC will now provide the interconnection at the 220 kv transmission line at Borivali, a Mumbai suburb. This in effect means that TEC will be restoring the standby facility for the 500 MW BSES coal fired Dahanu plant in Maharashtra.
Sources at BSES said that the standby facility had been snapped as far back as June, 1996.
It all started when TEC which caters to a part of BSES power requirements demanded a standby charge of Rs 148 crore for the standby facility in mid-1997.
Under the standby arrangement TEC would supply power to BSES in case there was a failure at the Dahanu power plant. TEC, in turn, has a similar arrangement with Maharashtra State Electricity Board (MSEB). The TEC argument was that it had incurred an expenditure of Rs 297 crore in laying the line beside having to pay a substantial amount to MSEB as standby charges.
This was hotly contested by BSES which stated it was already paying this amount to TEC as demand charge while buying power. from it at Rs 2.63 per unit.
The state deputy chief minister Gopinath Munde who also holds the energy portfolio stepped in when the dispute showed no sign of resolution. He constituted a committee under the state energy secretary Asoke Basak to resolve the issue. Even the panel could not resolve issue as the two sides stuck to their guns. At this point the government stepped in and issued its fiat.