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MSEB snubs TEC's demand for supply to other states - Views on News from Equitymaster

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  • Oct 20, 1999 - MSEB snubs TEC's demand for supply to other states

MSEB snubs TEC's demand for supply to other states

Oct 20, 1999

The Maharashtra State Electrcity Board (MSEB) is prepared to consider Tata Electric Companies (TEC) proposal for an increase in power purchase price, but has turned down its request to supply power to other states. This was reported by a leading financial daily. TEC comprises of a basket of three companies - Tata Power, Andhra Valley Power and Tata Hydro, who share income and expenses in the ratio of 5:3:2. It holds a licence to supply power to Bombay area till FY2014.

MSEB has refused to accede to TEC's demand for power supply to other states arguing that TEC's licence does not allow such an arrangement. This has left TEC with surplus power of 400 MW during non-peak hours and around 200 MW in peak hours. The company is saddled with excess power as BSES, one of its bulk customers, has reduced power offtake from TEC. Even MSEB now sources most of its requirements from Dabhol Power Company.

Excess power supply has created some functional problems for TEC. At times, when there are no takers for its power, it has to scale down power generation at its plants,. Under-utilisation of its plants affects the company's business considerably.

TEC has no alternative, but to increase its generation/distribution area. Else it will continue to remain saddled with excess supply, which will have an adverse affect on profitability. Although the company has undertaken independent power projects (IPPs) in some places, this will nullify the losses it will suffer from excess power generation.


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