Staff Reporter

MUMBAI: The Maharashtra Electricity Regulatory Commission (MERC) has stayed the increase in the power tariff effected by Reliance Infrastructure. It had approved the increase last month.

Following discontent among consumers and violent protests organised by the Shiv Sena, the Maharashtra government on June 25 ordered the regulatory body to review the increase. The Commission was to have reported by July 10.

Energy Minister Sunil Tatkare said: “Reliance consumers will continue paying bills as per the old rates till the probe is completed.” A Ministry official said that under Section 86(2) of the Electricity Act, 2003, the government had asked the Commission to find out whether Reliance had been functioning efficiently and economically. Its accounts and meters would be investigated.

Though the Brihanmumbai Electric Supply and Transport (BEST), the other electricity supplier, had also increased its tariff, the increase in the Reliance rate was singled out for review. The official said: “The BEST is a public undertaking, and so the issue of profit-making as a motive behind the increase does not arise.”

The suburban residents, whom Reliance caters for, will have to pay Rs.326 (from June) for 100 units as against the old rate of Rs.202. “There is no reason for the increase,” said Shiv Sena MLA Subhash Desai who led the party’s protest.

“Reliance’s profits are way above the 15 per cent limit set by the Electricity Act,” he said. “The company’s profit after tax was Rs.1,085 crore for 2007-08. It was Rs. 297 crore in 2002-03, the year it took over the Brihanmumbai suburban electric supply.”

A Reliance official, who did not want to be named, justified the increase. Reliance had to buy power from other sources outside the State, he said, because of the shortage in generation. The cost of this power had risen by 262 per cent in the past four years, mainly because of the increase in fuel prices. As a result, he reasoned, 81 per cent of the company’s tariff went towards power purchase.

Three of the company’s projects for increasing generation were delayed over environmental and land acquisition issues, he said. If these were completed, the tariff would go down by 37 per cent. If load-shedding was introduced in Mumbai as in other parts of the State, the tariff would fall by 36 per cent.

Shantanu Dixit, a member of the energy group of Prayas, a Pune-based non-governmental organisation, blamed the electricity crisis on the lack of capacity addition in the past 10 years.

“Today, Maharashtra has a shortage of 4,000 megawatts,” he said. “Buying power is expensive, so tariff hikes and load-shedding happen.”