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Tata Power To Take Over CESU


24 December 2019

OMMCOM NEWS


Bhubaneswar: Central Electricity Supply Utility of Orissa (CESU) has been privatized with Tata Power bagging a 25-year license for distribution and retail supply of electricity in five circles which constitute the former's area of operation.

The Odisha Electricity Regulatory Commission (OERC) has announced that Tata Power has emerged as the successful bidder in the bid invited for the privatization of CESU. The OERC has issued Letter of Intent (LOI) to Tata Power in this connection.

Initially, Tata Power has been granted a license for distribution and retail supply of electricity in the five electricity circles of Bhubaneswar circle I & II, Cuttack, Paradip and Dhenkanal (nine coastal districts and 45 panchayats of Jajpur district) spread over 30,000 square km with a population of over 1.4 crores and a consumer base of 2.5 million.

A special purpose vehicle (SPV) will be formed for the purpose in which Tata Power will own 51% and the remaining 49% will be held by Odisha government.

According to sources, as per the deal, CESU has been valued at Rs 350 crore and Tata Power has bagged the license for about Rs 175 crore.

As per the contract a trajectory has been drawn up for loss reduction in CESU. Tata Power outbid India Power Corporation Ltd for bagging the contract.

It may be pointed out here that the State government had been making efforts to sell CESU since 2009-10. Prior to this bid, the State government had earlier invited bids on four occasions for selling CESU. On the last occasion, only one party had put in its bid forcing the government to cancel the tender.

The State government had roped in PricewaterhouseCoopers International Limited (PwCIL) for selling its stake in CESU.

In 2016, the OERC got two bids from Tata Power and IPCL-Fedco in response to its tender and it selected the former for the partnership with the State government in the SPV.

In 2001, following the exit of American company AES from  distribution and retail supply of electricity, in the aforementioned areas, the job was vested with erstwhile CESCO which was renamed as CESU in 2006. All properties of CESCO and its management were handed over to CESU.

As on March 31, 2018, CESU had 6407 employees. It had reported 31.72% (Transmission & Distribution) T&D loss and 34.07% Aggregate Technical & Commercial (AT&C) loss. The target is to reduce the AT&C loss to 22.57% and recover arrears to the tune of Rs 200 crore.

Out of the 25 lakh consumers of CESU, 90% are domestic, 7% industrial, 1% irrigation and 2% other consumers.