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After CESU, Tata Power takes over Southco, Wesco

The order was issued on December 28 amid concern that Tata Power may take same recourse as in the case of CESU asking for a review of the Commission order. 

Published: 30th December 2020 07:45 AM  |   Last Updated: 30th December 2020 07:45 AM   |  A+A-

Electricity

Fpr representational purpose.

By Express News Service

BHUBANESWAR: The Odisha Electricity Regulatory Commission (OERC) has issued an order vesting the management and control of two distribution companies, Southco and Wesco, with Tata Power Company Ltd (TPCL) with effect from January 1, 2021.The order was issued on December 28 amid concern that Tata Power may take same recourse as in the case of CESU asking for a review of the Commission order. 

The Commission had issued letter of intent (LoI) to TPCL for Southco and Wesco on December 3. The distribution licences of Southco will be transferred to Tata Power Southern Odisha Distribution Ltd (TPSODL) and Wesco to Tata Power Western Odisha Distribution Ltd (TPWODL).The new entities will act as special purpose vehicles in which TPCL and GRIDCO will hold 51 per cent and 49 per cent (pc) equity shares respectively.

Taking sou motu proceedings on the sale of Southco and Wesco to TPCL, the OERC in its order set the term of vesting. The Commission said non-compliance of licence conditions by TPCL will attract invocation of the performance guarantee provided to it. 

“The performance guarantee may be encashed for any reasons like failure to meet loss reduction target, collection of past arrears, timely payment of bulk supply price and transmission charges and any other reason as mentioned in the RFP and required under the license conditions,” the order said. 

As per the RFP, TPCL has made commitment to bring down aggregated technical and commercial (AT&C) losses in Wesco to 9.08 pc in 10 years from the present losses of 27.56 pc and in Southco from the current loss level of 35.29 pc to 14.80 pc during the same period.

It has also promised to collect arrears of Rs 300 crore from Wesco area and Rs 100 crore from Southco in five years time. “In case of failure to achieve the targets, the Commission shall have the right to recover the penalty amount by encashing the performance guarantee for any shortfall in meeting the AT&C loss targets committed by TPCL in its bid and/or revoke the licence of TPSODL and TPWODL,” OERC said.

Some of the intervenors expressed concern that the review petition filed by TPCL in the matter of vesting of Tata Power Central Odisha Distribution Limited (TPCODL) raises doubts in the matter of vesting of Southco and Wesco. The Commission said the matter has been dealt in a separate order. 

Terms and conditions 

Non-compliance of licence conditions by TPCL will attract invocation of performance guarantee provided to it
Performance guarantee may be encashed for any reasons like failure to meet loss reduction target, collection of arrears etc
TPCL has made commitment to bring down AT&C losses in Wesco to 9.08 pc in 10 years 
It has promised to collect arrears of `300 crore from Wesco area and `100 crore from Southco in five years



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