NTPC Ltd has evinced interest to acquire Reliance Infrastructure Ltd’s Delhi electricity distribution businesses
Anil Dhirubhai Ambani Group, which owns Reliance Infrastructure, is trying to sell assets to cut its debt
NEW DELHI :
India’s largest power generation utility NTPC Ltd has evinced interest to acquire Reliance Infrastructure Ltd’s Delhi electricity distribution businesses, said a person aware of the development.
This comes in the backdrop of Enel Group of Italy, Torrent Power Ltd and Greenko Group submitting non-binding offers on Friday to buy Reliance Infrastructure Ltd’s 51% stake each in BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL), that supplies electricity to around 4.4 million customers in the national capital.
According to a communication dated 26 May to Delhi State Regulatory Commission (DERC) reviewed by Mint, state run NTPC said, “We have learnt from media reports that Reliance ADAG wants to divest its 51% stake in BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL)."
“We would like to inform you that NTPC has decided to foray into distribution sector and is keen on acquiring the distribution assets," the communication said.
Spokespersons for NTPC and BSES declined comment.
Mint reported on 12 May about Anil Ambani putting BSES Rajdhani and Yamuna discoms on the block and at least eight investors showing initial interest in the same.
“It is submitted that NTPC is keen to explore the opportunities for acquiring 51% stake in BRPL and BYPL, which are on sale, provided the equity sale is done through a transparent process," the communication added.
Anil Dhirubhai Ambani Group, which owns Reliance Infrastructure, is trying to sell assets to cut its debt. KPMG is managing the stake sale process.
While announcing the March quarter earnings on 8 May, Reliance Infrastructure said it “aims to be zero debt in the next financial year based on liquidity events".
Reliance Infrastructure sold its Mumbai city power distribution business to Adani Transmission Ltd for Rs18,800 crore in August 2018.
The total regulatory assets' claims of BRPL and BYPL are to the tune of around Rs40,000 crore. A regulatory asset is created when the power regulator accepts certain expenditures but does not factor them in while setting tariff. These expenditures are to be adjusted in future tariff changes and, in the interim, are accounted for as regulatory assets.
These power distribution utilities are some of the most stable and lucrative assets in India, with the national capital reporting the lowest aggregate technical and commercial loss of 9.7% in the country, where the average loss is 21.4%, among the highest in the world.
While BSES Rajdhani Power has a per capita electricity consumption of 4,771 kilowatt-hour (kWh) and a peak demand of 3,211MW; BSES Yamuna Power has a per capita electricity consumption of 3,864 kWh per year and a peak demand of 1,561MW. In comparison, India’s per capita power consumption is around 1,149 kWh, among the lowest in the world.
Three of Delhi discoms were privatized in July 2002: BSES Rajdhani Power, BSES Yamuna Power and Tata Power Delhi Distribution Ltd. The distribution firms are joint ventures with Delhi Power Co. Ltd, which owns a 49% stake in each of them. The other discoms in Delhi are Military Engineering Services (for Delhi Cantonment) and the New Delhi Municipal Corporation.
NTPC is also likely to compete in the privatization exercise of power distribution utilities in the Union territories, Mint reported on Wednesday.
There is growing interest in India’s power distribution space. Among local companies interested in the UTs assets are CESC Ltd, Torrent Power, Greenko Group, Tata Power, National Investment and Infrastructure Fund (NIIF) and Adani Group. Large foreign utilities such as Italy’s Enel Group, Malaysia’s Tenaga Nasional Bhd, Electricite de France SA and Hong Kong’s biggest electricity provider China Light and Power Co. Ltd are also expected to participate. The third set of probable investors include funds such as Brookfield Asset Management Inc., Caisse de dйpфt et placement du Quйbec, CDC Group Plc, Macquarie Group and Actis Llp.
The Union government aims to privatize discoms in the Union territories of Dadar and Nagar Haveli, Daman and Diu, Puducherry, Chandigarh, Andaman and Nicobar Islands, Lakshadweep Islands, Ladakh and Jammu and Kashmir discoms. These discoms have an enterprise value of around $700 million.
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