BEST monopoly on Mumbai power supply threatened by Tatas
16 August 2014
The BEST monopoly on power supply to mainland Mumbai monopoly will soon come to an end as Tata Power Company (TPC) has been granted distribution licence in the heart of India's financial capital for the next 25 years, giving residential consumers the option of switching on cheaper power.
This could be a big blow to finances of the Brihanmumbai Municipal Corporation, the country's richest civic body, which runs BEST (Brihanmumbai Electric Supply & Transport) - though the famous BEST 'red buses' will continue to be a transport mainline.
BEST has been providing power to over a million consumers between Colaba and Cuffe Parade and Sion and Mahim.
There is a caveat in Maharashtra Electricity Regulatory Commission (MERC) order freeing up power supply. It said it was granting Tata Power the licence "in public interest", but pointed to Tata Power's "inadequate network rollout plan" and directed Tata officials "to approach the commission in 6 weeks with a fresh rollout plan".
The order stated, "The rollout plan submitted by TPC is inadequate as it seeks to cater for 50 per cent of the total expected load by catering to only 31 per cent of consumers, which is not conducive to a level playing field and genuine competition.
''In its rollout plan, TPC has not addressed the past directions issued or timelines prescribed by the commission. TPC has also not proposed a detailed methodology to ensure that the laying of network will be done to ensure supply to all categories of consumers including the category of consumers with lowest consumption.
"TPC has faced several operational difficulties which have delayed its network expansion. Therefore, the commission deems it appropriate to specify a phase-wise rollout to ensure that TPC lays its network in its entire area of licence in a time-bound manner," the order said.
BEST had strongly opposed TPC's entry, stating that its very existence would be endangered and around 47,000 employees would become redundant. It also informed MERC that that this could result in political and social unrest and may lead to a law and order problem.
The commission, however, observed that the Electricity Act stipulated the existence of two or more parallel distribution licencees in the same area and, as held by the Supreme Court, no exemption power was provided for a local authority.
The order stated, "TPC has been authorized to supply to all consumers in areas which include those covered by BEST. Thus, two licencees are already operating in the area of BEST. Considering this fact, the commission is of the view that there is no merit in the apprehension of BEST that owing to the grant of a licence in its area to any other person, the very existence of BEST will be endangered. BEST would require to address the competitive environment through its own performance."
Tata Power received a transmission licence for the transmission and the receiving stations (or Transmission Receiving Stations) located in and outside the Mumbai area, owned by TPC or proposed to be constructed and owned by TPC in future and forming part of Intra-State Transmission System of Maharashtra.
In a statement issued on Friday, TPC said it will "support BEST's case for transport subsidy to be rationalised across each electricity unit collected so that it's not just left to BEST to collect the same. It will also make sure that BEST margin of business is not affected adversely as it has been a long-term participant in power supply system in Mumbai."