Tuesday, December 26, 2006

The REL saga continues ...

This is like a bottomless pit !!
It just keeps getting deeper and deeper ... read on ...

1. Reliance's DTH business, BlueMagic, is a subsidiary of REL

By now you all know that the Electricity company needs permission to do other businesses – I wonder if
MERC has granted them permission for this.

Here are the weblinks:

2. REL is also into construction of Highways in Tamil Nadu
Again, permission taken from

Here is the weblink:

3. REL has TWO Certificates of Incorporation !
When the name was changed from “Bombay Suburban Electric Supply Limited” to “BSES Limited” on Dec 23, 1992, no separate Certificate of Incorporation was sought from the Registrar of Companies.

But when name was changed from “BSES Limited” to “Reliance Energy Limited” on
Feb 24, 2004, a fresh Certificate of Incorporation was sought for - and granted/received.

Why does REL need TWO concurrent Certificates of Incorporation ? Is it allowed by law ?

This information about having two certificates, appears in the Notice of the Court Convened AGM of
April 26, 2006 for the Scheme of Amalgamation of REL and Reliance Energy Ventures Ltd.

The pdf file is available here:

So, probably, when it suits them, they say they are incorporated in 1929, and at other times they can say they were incorporated in 2004 - something seems to be really fishy here !

4. Interest Cost on Borrowings is 10% or 0% ?
In the Revenue statement (ARR) submitted by REL, MERC has approved an interest rate of 10% as cost of funds, for funding capital expenditure.

Interestingly, in Nov 2006, REL has completed a ZERO-rate FCCB (Foreign Currency Convertible Bonds) arrangement of US$ 150 million (Rs 750 cr). An FCCB is a Bond (something like a term borrowing) which can be converted into equity after a specified period. ABN AMRO arranged for this and it was placed with 8 US-based financial institutions.

So tell me ... should the interest rate be taken as 10% or 0% ?? If cost of funds is zero, then the ARR submitted to
MERC should be revised and the interest should be written back.

In which case, the revenue gap will be lower and REL should charge lower rates for electricity. On one hand, REL is claiming a higher 10% cost of funds and getting electricity rates approved - and on the other, the actual borrowing is at lower rates. Now, I could be wrong here - but then again, think for yourself ...

REL's announcement of this appears on the BSE website here:

MERC is still not confirming that REL has a Licence !

We have asked MERC (on Nov 30, 2006) to confirm whether REL had a Licence in their own name - either a fresh one - or the old "Bombay Suburban.." one duly assigned ..

In their reply dated Dec 19, 2006, MERC is silent on both counts .... WHY ?? If REL indeed HAS a Licence, why is MERC not saying so clearly - and putting all speculation to rest ??

REL Group's Double Standards
Interestingly, this same Reliance group is opposing exclusivity in City Gas distribution, yet it is enjoying the benefits of exclusivity in the City Electricity business !!

See that news item here:
What to do ??
Well, I think this has gone too far .. and its high time we, consumers, became aware of such transgressions.

My suggestions still remain the same .. let's NOT pay the Bills, which I hope will make all concerned, sit up and rectify these issues.
In any case, since REL does not have the Licence for Mumbai in their own name, they are not empowered by law to disconnect the electricity supply.

I know of one consumer who has NOT paid the REL electricity bill on these very grounds ... for 2 1/2 years .. and REL has not disconnected the supply!!

However, in the long run, its best if this monopoly goes once and for all ..

Please endorse the online petition to remove exclusivity at:

In which case, even REL will get an opportunity to do more business in Mumbai - they can sell into Tata, BEST and MSEDCL areas (and vice versa) .. so this is all in the spirit of fair enterprise!

Does anyone have any other ideas on what we should do about this ?? Sign up at NEMESIS-Forum and lets keep this discussion going, till we arrive at something sensible. Send an email to NEMESIS-FORUM-subscribe@yahoogroups.com

Don't become a victim of this injustice !

Well ... and that's how I feel ...

1 comment:

Anonymous said...

Check out this latest article:-

Reliance targets city gas monopoly


Different Views/Rules for self nd for other companies