BHUBANESWAR: Tata Power Company Limited ( TPCL), a subsidiary of Tata Group, will take over the management of Central Electricity Supply Utility (CESU) from June 1.
The Odisha Electricity Regulatory Commission (OERC) that awarded the Letter of Intent (LOI) to TPCL on December 12, 2019 on Thursday issued vesting order for a consideration of about Rs 175 crore.
Tata Power will hold 51 per cent equity with management control and the State-owned Gridco will have the remaining 49 pc equity stake in the company, said OERC Director (Regulatory Affairs) Priyabrat Patnaik.
TPCL has provided a performance guarantee of Rs 150 crore and assured to open a letter of credit in favour of Gridco, the bulk power supplier of the State. “Tata Power has assured to reduce the aggregated technical and commercial (AT&C) loss as per the Commission’s approved trajectory failing which performance guarantee will be invoked,” Patnaik said.
With a massive arrear of about Rs 1,800 crore, TPCL has assured the commission to recover past arrears to the tune of Rs 200 crore from the consumers.Besides, the company has promised to invest Rs 1,541 crore in the coming five years for system improvement. As per the agreement, TPCL will retain all the existing employees of CESU.
The Tata subsidiary has bagged a 25-year licence for distribution and retail supply of electricity in five circles, together constituting CESU. The five electrical circles are areas of Bhubaneswar (Electrical Circle - I and II), Cuttack, Paradip and Dhenkanal.
CESU is spread over 30,000 sq km with a population of over 1.4 crore and consumer base of 2.7 million.
Presently, Tata Power has total consumer base of 2.5 million across Mumbai, Delhi and Ajmer and with acquisition of CESU, its consumer base would double and touch 5 million consumers. The State which pioneered power sector reforms in 1999 was the first to privatise distribution business. This is the second phase of reforms in power sector.