Reliance Energy, the power arm of the industrial house Reliance group, is planning a voluntary retirement scheme this fiscal, which could see its employee strength fall by 1,000. The company is planning to offer the scheme to its employees in the distribution business across all levels.

Reliance Energy had last year pared its staff strength by around 4,500 at its two distribution arms in Delhi and turned them around.

Tata Power Company, another major private sector player in the electricity business, too is looking at the possibility of introducing a VRS.

If the scheme goes through, Reliance Energy would reduce its total staff by around 18 per cent based on the total workforce of 5,539 in April 2003. The employee strength of its distribution business would fall by about 23 per cent based on the April 2003 figure of 4,261.

Reliance Energy distributes power to large parts of Mumbai, primarily to retail customers, under a sub-licence.

"It is proposed to provide for a VRS at all levels of employees engaged in distribution in order to rationalise the staff strength and bring in efficiency in our distribution operations," BSES, as the company was known till about two months back, has said in a submission before the state power regulator, the Maharashtra Electricity Regulatory Commission.

The submission has been made in a document titled 'Projections for financial year 2004-05' and is a part of the application filed for aggregate revenue requirement.

Reliance Energy did not respond to a questionnaire sent by Business Standard.

The company has estimated the net outgo on the VRS at Rs 42 crore (Rs 420 million), and on account of this its total employee expenditure will come down by about Rs 12 crore (Rs 120 million). The company has assumed a net provision of Rs 30 crore (Rs 300 million) for the VRS.

The move by the Reliance group must be seen in the context of the passage of the Electricity Act 2003, which places a premium on efficiency as it has the potential to transform the power business by making increased competition possible.

Consequently, companies will have to decrease tariffs by optimising efficiencies, as over a period of time consumers will be able to choose their power suppliers.