Ambani-Adani power switch won't affect consumers
MERC clears Rs 18,800-crore deal between companies with the rider on tariff; to come into effect in July
The suburbs will soon have a new power distributor in Adani Transmission Limited (ATL). The good news is that the transaction between the purchaser and the seller, Reliance Infra, which owns the current supplier, Reliance Energy, wouldn't have any adverse impact on the monthly bills of 30 lakh consumers. The Maharashtra Electricity Regulatory Commission (MERC) cleared a much-debated Rs 18,800-crore deal between the two companies on Thursday, telling them in an official order to ensure that the tariff payable by the consumers was not increased.
Confirming that the tariff will continue to be determined on the basis of regulated books of accounts and the companies should not claim any amount from the consumers on account of the proposed transaction, MERC offered relief to the interveners, consumer activists and political parties like the Congress, which had been fearing a tariff hike after the deal.
MECR said, "Further, the balance sheet of REGSL (Reliance's generation arm) will reflect the amount paid by ATL to RInfra, i.e., Rs 12,101 crore, for 100% shareholding in terms of equity and debt. The sum of equity and debt approved by the commission is much lower, around Rs 5,600 crore (R3,400 crore of equity and Rs 2,200 crore of debt). ATL should ensure that the higher debt amount in REGSL's books compared to the regulatory books of accounts does not adversely affect REGSL's credit rating, which in turn could increase the cost of debt and thereby the ARR and tariff recoverable from consumers," said MERC.
RInfra said in a statement that the deal should be closed by July this year and proceeds of the transformative transaction should entirely be used to help it become debt free, with up to Rs 3,000 crore cash surplus.
Pay government first
MERC has asked Reliance to pay the Maharashtra government’s long-pending dues in electricity duty and other levies — Rs 2,117.86 crore, and interest of Rs 100 crore per month — till date, if they wanted all transfers approved. “The commission is of the view that non-payment of the ED and ToSE (Tax on Sale of Electricity) collected from the consumers, to the GoM by RInfra, is a serious case of default. The commission cannot permit assignment of Distribution Licence and transfer of distribution assets from RInfra to REGSL, and sale of 100% shareholding in REGSL to ATL, unless all such statutory dues accrued till the appointed date are first paid to the government,” it said.
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