Tata Power has been awarded the license to distribute power in five circles of Odisha. The move is expected to reduce losses in the distribution of power.
December 26, 2019. By Hemant Arora
The Odisha Electricity Regulatory Commission (OERC) has awarded licence in five circles of Odisha for the distribution and supply of electricity.
Bhubaneswar (Electrical Circle I and II), Cuttack, Paradip, and Dhenkanal are the five circles for which the Letter of Intent (LoI) has been awarded by the OERC. The licence is offered for 25 years, the period for which supply of electricity will be done.
The average power demand of CESU is approximately 1.3 GW for the consumer base of 2.5 million people. The CESU is spread over an area of 30,000 square km, covering a population of 14 million.
Currently, Tata Power's consumer base is around 2.5 million. Now, with the addiction of CESU, the figure is expected to touch the 5 million mark.
Explaining on the development, Praveer Sinha, CEO and managing director of Tata Power, said, “Tata Power has several successful public-private partnerships in the generation, transmission, and distribution in the country. Recently, our focus has been on increasing the company’s existing footprint in the distribution of electricity through Public-Private-Partnerships (PPP) with DISCOMs. This tie-up with CESU is the latest such partnership in the distribution business.”
According to the sources, the proposed acquisition of CESU by Tata Power will be through the formation of a special purpose vehicle (SPV). Through the SPV, the Tata Power will have 51% equity, and the Odisha government will have a 49% stake in the SPV.
Tata Power has a considerable presence in the country, and with its subsidiaries and jointly controlled entities, the company has an installed capacity of nearly 11 GW. Renewable energy assets account for almost 30% of the company’s portfolio.
Earlier, Tata Power has acquired distribution licence in Mumbai, Delhi, and Ajmer. After the privatization of the Delhi Vidyut Board in 2002, Tata Power had entered into a similar PPP model. According to the company officials, the PPP model has helped in lowering down the aggregate technical & commercial (AT&C) losses in Delhi. It has been brought down from 53 percent in 2002 to around 8 percent till recently.