TEC, whose proposal for the 450mw combined cycle project at Bhivpuri is yet to recieve approval, has requested the MSEB and the government to give it a hearing before taking a final decision.

Mantralaya and MSEB sources said TEC's submission would be taken into account before giving clearance to BSES. TEC has pointed out that MSEB's approval to the BSES project will have "serious impact unless due safeguards are taken in time." "These safeguards have been agreed to by the state government through the acceptance of the recommendations of the Kukde committee," TEC has said.

The committee had suggested that both the Palghar and Bhivpuri projects should be implemented in a phased manner. It had also recommended that the present arrangement between the MSEB and TEC and TEC and BSES should not be disturbed in the future even after the commissioning of the projects.

TEC fears that with the approval to the Palghar project, its sales to BSES would drop, which would hit the company's financial performance. It had said that the Palghar project would be tantamount to delimiting TEC's licensed area by causing a substantial cut in sales and revenues.

According to TEC, its possible sales to BSES of 5,700 million units have shrunk to 2,700 million units after the Dahanu generating station was commissioned. Under the present arrangement, TEC is the bulk licensee serving the Mumbai area, while BSES and the Bombay Electricity Supply and Transport (BEST) are the distributors for TEC.

Till 1981, MSEB was supplying power to TEC to serve the Mumbai area on a two-part tariff basis. Since 1984, however, the actual maximum demand has been converted into a fixed contract demand at 300 MVA. TEC has pointed out that there are important legal aspects, as it has invested over Rs 2,500 crore in developing the Mumbai power supply infrastructure. "Much of this is with World Bank loans." The Centre has given a guarantee to the World Bank that it will "ensure that no actions will be taken that will adversely affect TEC's financials".