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TEC-BSES tussle… - Views on News from Equitymaster
 
 
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  • Oct 7, 2000

    TEC-BSES tussle…

    The tussle between the Tata Electric Companies (TEC) and BSES Limited over standby charges has taken a new twist. After steadfastly refusing to pay over Rs 2 bn owed to TEC as standby charges, BSES has now offered to pay Rs 270 m as an annual instalment.

    If one were to recall, the disputed standby charges were actually hiked and levied on TEC by the Maharashtra State Electricity Board (MSEB) for power supply. TEC in turn supplies over 2,500 million units of power to BSES, who has the licence to distribute to the Mumbai circle. So TEC passed on about half of the hike to BSES. BSES contested this, but the court gave the decision in favour of TEC. In all this drama the MSEB was not getting the standby charges. MSEB was facing difficult financial conditions and wanted the money urgently.

    To put pressure on BSES to pay up, the Maharashtra government refused to give it the necessary go ahead for setting up another 495 MW gas based power project at Palghar, Maharashtra. Recently, it also threatened to revoke BSES distribution licence if it did not pay up. Only then did BSES relent and has offered a part payment towards the charges.

    But the company has still stuck to its stand that the charges levied are unfair. The company is still in favour of approaching the Maharashtra Electricity Regulatory Commission for reddresal.

    The current offer is unlikely to bring truce between the two warring utilities, as it is unlikely that TEC will accept the part payment, for it has to pay up MSEB fully in one shot. For BSES it will be difficult to pay up fully without passing the hike on to its consumers. But at the same time, it cannot risk annoying the MSEB or the state government further.

    So the last word is yet to be said on this.

     

     

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