NEW DELHI :
As part of Naveen Patnaik-led Odisha government’s privatisation exercise, Crisil and Deloitte have been given the mandate for managing the sale of Western Electricity Supply Utility of Odisha Ltd (WESCO), Southern Electricity Supply Utility of Odisha Ltd (SOUTCO); and North Eastern Electricity Supply Company of Odisha Ltd (NESCO) respectively, said two people aware of the development.
In what would be the first such deal in nearly two decades in India’s power sector, the drive is headed by Odisha Electricity Regulatory Commission (OERC).
Odisha has an average power demand of 4,000 mega watt (MW). While WESCO supplies electricity to consumers in the distribution circles of Rourkela, Burla, Balgarh, Bolangir and Bhawanipatna; SOUTCO supplies electricity to consumers in the distribution circles of Behrampur, Aska, Bhanjanagar, Jeypore and Rayagada. NESCO supplies electricity to the districts of Balasore, Mayurbhanj, Keonjhar, Jajpur, and Bhadrak. The potential sales would be the first transaction since the 2003 privatisation of power distribution in Delhi.
In a related development, Tata Power Co. Ltd. has emerged as the sole contender to acquire Central Electricity Supply Utility of Odisha (CESU Odisha) with PricewaterhouseCoopers is managing the sale of CESU.
This comes in the backdrop of the National Democratic Alliance (NDA) government’s ambitious target of generating Rs1.05 trillion from asset sales in the current fiscal year.
“We are bound by confidentiality obligations and are unable to comment on client-specific matters," a Deloitte spokesperson said in an emailed response.
A PricewaterhouseCoopers spokesperson in an emailed response said, “Due to client confidentiality concerns we may not be able to provide any comment in particular." Queries emailed to Crisil on Monday evening remained unanswered.
Power distribution companies have so far been the weakest link in the electricity value chain. Poor payment records of state-owned discoms have not only adversely affected power generation companies, but have also contributed to stress in the banking sector. The delay in payment by state-run power distribution companies range from two months to 15 months,.
However, the power distribution sector has also started witnessing large transactions. While Hyderabad-based Greenko Group, backed by Singapore’s sovereign wealth fund GIC Holdings Pte and Abu Dhabi Investment Authority, had evinced interest in acquiring Reliance Infrastructure Ltd’s Mumbai power business, it was Adani Transmission Ltd that emerged successful for the Rs18,800 crore deal in December 2017.
“Tata Power was the only technically qualified bidder CESU. The financial bids have opened. The Odisha government’s approval is now awaited to take it ahead," said a person aware of the development cited above requesting anonymity.
Feedback Energy Distribution Co. Ltd (FEDCO) and India Power Corp. Ltd had also placed a joint bid for CESU, Mint reported on 11 October last year.
“We have submitted the bids for CESU PPP project. The technical and price bids have been opened. The evaluation process is on. We are yet to hear from OERC (which had carried out the bidding process) on the outcome of the bids," a Tata Power spokesperson said in an emailed response.
Only one bidder had emerged in an earlier attempt to privatise CESU Odisha, forcing cancellation of the process. The Central Electricity Supply Company of Odisha Ltd (CESCO), CESU Odisha’s forerunner, was privatised in 1999 with the licence granted to US-based electricity producer AES Corp. The OERC revoked the licence in 2005.