Power sector reforms gain pace as pvt cos bid to buy UT discoms | Mint
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Business News/ Industry / Energy/  Power sector reforms gain pace as pvt cos bid to buy UT discoms

Power sector reforms gain pace as pvt cos bid to buy UT discoms

Firms such as ReNew Power, Adani Group, Torrent Power have placed acquisition bids for 3 UT discoms

Private firms are trying to cash in on the opportunities in India’s electricity distribution business (Reuters)Premium
Private firms are trying to cash in on the opportunities in India’s electricity distribution business (Reuters)

India’s next generation power sector reforms have gained traction with private firms, including ReNew Power Ventures Pvt. Ltd, Adani Group, Torrent Power, and CESC Ltd, bidding for the power distribution companies (discoms) for the Union territories (UTs) of Dadra and Nagar Haveli, and Daman and Diu, said two people seeking anonymity.

State-run NTPC Ltd, Adani Group, ReNew Power, Tata Power, Torrent Power, and Sterlite Power have also placed their bids to acquire the Chandigarh discom, as part of India’s efforts to privatize discoms.

India seeks to privatize the discoms for eight Union territories for an enterprise value of around $700 million. Unlike the discoms run by state governments, discoms for the Union territories are administered by the Centre.

“The successful bidders will be announced shortly. Dadra and Nagar Haveli and Daman and Diu discoms have been clubbed to bid out," said one of the two people mentioned above.

The discom privatization plan for Union territories was articulated by finance minister Nirmala Sitharaman when she announced the fourth tranche of the 20 trillion stimulus package to fight the covid-led economic crisis.

Deloitte is running the sale process for the discoms in Chandigarh, Puducherry and Andaman and Nicobar Islands, while SBI Capital Markets Ltd has the mandate for Dadar and Nagar Haveli, Daman and Diu, Jammu and Kashmir and Ladakh.

Private firms are not only trying to cash in on the opportunities in the electricity distribution business, but have also been enthused by the budget proposal to set up a framework allowing consumers to choose their electricity supplier. The ongoing budget session in Parliament will consider the Electricity (Amendment) Bill, 2021, with proposed amendments, such as measures to “de-license" the power distribution business and make the sector more competitive.

Experts said India’s distribution space, long plagued by issues such as low tariff collection, increase in power purchase costs, inadequate tariff hikes and subsidy disbursements, besides mounting dues from government departments, is ready for the new-generation power sector reforms. “One is encouraged by the diverse participants and interest in the Union territories electricity distribution privatization process. It is coming on the back of the announcement of a framework for customer choice of their discom in this budget. Decarbonization and digitization potential along with providing bundled services to customers will provide significant value accretion to investors," said Sambitosh Mohapatra, partner, power and utilities, PwC India.

In response to Mint’s emailed queries, a Deloitte spokesperson said: “We are bound by confidentiality obligations and are unable to comment on client-specific matters." An SBI Capital spokesperson also did not comment.

Queries emailed to spokespersons of Torrent Power, Adani Group, Tata Power, Sterlite Power, CESC and NTPC late on Monday night remained unanswered till press time.

A ReNew Power spokesperson declined comment.

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Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 09 Feb 2021, 11:01 PM IST
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