Tata Power and Hemant Kanoria-controlled India Power Corporation Ltd have bid to acquire Odisha’s Central Electricity Supply Utility (CESU), being privatised again after 17 years.
This is first discom privatisation after licences for Delhi Vidyut Board were handed over to Tata Power Delhi Distribution Ltd and BSES Delhi discoms.
“The bidding distribution companies will have the option to float joint ventures with Odisha or acquire the licence completely,” said sources familiar with the matter.
Tata Power declined to comment on the issue, while there was no response to a query sent by ET to India Power Corp till press-time.
Orissa Electricity Regulatory Commission (OERC) had called bids for the sale of CESU in December last year. The successful bidder will manage, invest and operate the company for 25 years.
CESU distribution area comprises 19% of the state with major cities of Bhubaneswar, Cuttack, Paradeep, Angul and Talcher and a revenue potential of about Rs 3,000 crore.
There are about 2 million consumers and AT&C losses are high at 35%. The discom has a debt burden of about Rs 2,000 crore while its receivables are at around Rs 1,700 crore, sources said.
Odisha was the first state to privatise power distribution sector by dividing the state into four companies.
The state had in 1999 handed over CESU to AES Corp, while the other three — Wesco, Nesco and Southco — were handed over to BSES.
After AES Corp withdrew from CESU in 2001, the Odisha state electricity regulator has been operating the discom and had made several attempts to privatise it.
The state had in 2015 also revoked three distribution licences given to BSES citing performance issues. Currently, Gridco is managing operations of the three discoms.
CESU privatisation comes at a time when the NDA-led central government plans to levy hefty penalties on power distribution companies for load shedding and make provisions for direct subsidy transfers by states to power consumers.
The Union power ministry is amending the Electricity Act and has recently released the draft for public consultations. The draft explicitly fixes 24×7 power supply obligation on electricity distribution licensees. Proposed amendments to National Tariff Policy also require discoms contract firm power purchase agreements to ensure reliable power supply.
News Source: Economic Times