The Orissa government has submitted its reply to the issues raised by the Orissa Electricity Regulatory Commission (OERC) pertaining to the revocation and suspension of license given to the three power distribution companies owned by Reliance Energy Ltd (REL) in the state.
The government has recommended that the commission may take action against the REL managed power distribution companies as per the provisions of the law. It further stated that subject to the similar commitment by REL, the government is ready to infuse capital in these distribution companies.
However, there wouldn’t be any direct funding to these distribution companies and the capital infusion will be through Gridco, which owns 49 percent stake in the companies, sources said. A copy of the reply will be sent to REL for soliciting its comments, after which a formal date of hearing will be decided by OERC.
Hearing a petition filed by Sarat Mohanty, General Secretary, All Orissa Electricity Workers Federation, for revocation of license given to the three power distribution companies owned by REL, OERC in its order on 22 August 2009, directed the state government and Gridco to submit their views on or before 30 September 2009.
The commission sought the views of the state government and Gridco on what will be the plan of action of the government, having regard to a situation like that of CESU to be avoided, in case the Commission decides to suspend the license of the REL managed distribution companies.
Similarly, the commission wanted to know if the government is prepared to infuse capital in the form of additional equity in cash and not through conversion of debt into equity, thereby obligating REL to bring equal amount of equity into the distribution companies.
OERC also wanted to know about other alternatives that can be implemented to ensure continuous and steady power supply to the consumers. However, the state government and Gridco were unable to submit their views due to some procedural delays. They were given time till 31 December.
It may be noted, in a petition filed before OERC on 3 September 2005, Mohanty stated that the REL owned power distribution companies, namely Wesco, Nesco and Southco, have violated the conditions of license.
The petitioner also mentioned about the failure of the company to infuse capital, failure to appoint adequate manpower, absence of guidelines for transfer, failure to provide counterpart funding in respect of APDRP scheme, lack of maintenance of lines, absence of upgradation of transformers, power supply for LT load, refusal of REL to renew the shareholders’ agreement signed on 1 April 1999 and failure to bring down the transmission and distribution (T&D) losses to strengthen his argument.
Based on the petition, OERC served show cause notice to REL on 27 January 2006 as to why its license will not be suspended under section 24 of the Electricity Act 2003. It also appointed special officers to oversee the operation of the distribution companies and to file report on the activity and management of distribution companies.
However, this order was contested by REL in the Appellate Tribunal for Electricity (ATE) and the tribunal set aside the order of OERC following which OERC moved the Supreme Court. While Supreme Court upheld the order pertaining to the suspension of the license as valid, it struck down the order pertaining to the appointment of special officers.
It also directed OERC to re-hear the case and REL was directed to file its reply to the show cause notice issued by OERC on 27 January 2006.Subsequent to this, REL has submitted the reply to OERC and the commission is hearing the matter.
