R-Infra’s likely exit may mean more power for Mumbai suburbs

With Reliance Infrastructure's licence to distribute power in Mumbai's suburbs expiring on 15 August, residents are likely to get a new power distributor – and perhaps more than one, increasing competition and hence perhaps leading to lower tariffs and more reliable supply.

Through an order issued on 1 April, the Maharashtra Electricity Regulatory Commission (MERC) made it clear that R-Infra's licence won't be renewed automatically as the Electricity Act, 2003 does not provide for it.

R-Infra is of course free to bid for a fresh licence, but it will be in competition with several others.

Apart from Tata Power Co, which is already R-Infra's bitter rival in the suburbs, the company would be competing with Maharashtra State Electricity Distribution Company Ltd,  Torrent Power, Lanco Infrastructure and Indiabulls Power, which reportedly have already put in bids for the license. Others mentioned in reports are the Torrent Group, GMR Energy, Enzen Global Solutions, and Kolkata-based DPSC.

R-Infra has been under fire over high tariffs and unreliable services. The outcry by residents has been picked up by local politicians, who had demanded that its license be scrapped.

R-Infra issued a statement that said, ''While expressing its views on certain statutory provisions on the issue of granting renewal or extension for distribution license, MERC has advised R-Infra to undergo process of application for distribution license as mentioned in the Electricity Act. R-Infra shall initiate appropriate steps.''

In fact, a report in The Economic Times suggests that MERC may allow multiple power suppliers in suburban Mumbai, giving consumers more options to choose from. "Like the telecom industry, consumers will be free to pick and choose power suppliers on the basis of their efficiency and low tariff," the paper quoted an energy department official as saying.

R-Infra has filed a petition in court seeking a 25-year extension / renewal of its distribution license for the Mumbai License Area. The original application was filed on 1 November 2010. It was amended and re-submitted on 4 March 2011.