CESC has announced that its wholly-owned subsidiary has emerged as the highest bidder in the privatization process of power distribution in the UT of Chandigarh.
In a stock exchange filing, CESC said that Eminent Electricity Distribution Ltd, its wholly-owned subsidiary, has emerged as the highest bidder for acquiring 100 per cent stake in power distribution company for the UT of Chandigarh.
The aforementioned acquisition is for distribution licence is subject to further formalities as prescribed under the tender documents, including receipt of letter of intent, the filing added.
According to a reliable media report, Eminent quoted Rs.871 crore, getting the better of six other contenders whose quotes varied from Rs.606 crore to as low as Rs.201 crore. (See table). Around 17 entities had purchased the request for proposal (RfP) documents.
It may be recalled that on December 1, 2020, the Punjab & Haryana High Court had issued a stay on the Centre’s proposal to privatize power distribution in Chandigarh. This was done by admitting a plea submitted by UT Powermen Union, Chandigarh. The court felt that the privatization was “unjust and illegal” for several reasons. However, the Supreme Court recently vacated the stay, paving the way for the process to resume.
In early November 2020, the EWEDC had floated the invitation for bids from potential entities to acquire complete control on Chandigarh’s power distribution. EWEDC is a deemed licensee under Section 14 of the Electricity Act 2003, and is carrying out the business of transmission, distribution and retail supply of electricity in Chandigarh.
The incumbent private player (now likely to be Eminent Power) will need to bring down aggregate technical & commercial (AT&C) losses to 7.6 per cent over the next five years, from the currently estimated 9.3 per cent for FY21. The UT of Chandigarh has a consumer base of 3 million, dominated by domestic consumers.
The privatization of power distribution in Chandigarh UT is in line with the Union power ministry’s plan of May 2020 to privatize power distribution in all Union territories, in a phased manner. Chandigarh is the first on the block. The process is being extended to Andaman & Nicobar Islands, Dadra & Nagar Haveli and Daman & Diu (DNH & DD), Puducherry, Jammu & Kashmir and Ladakh.
Also read: CESC board approves reorganization of power distribution business
DNH&DD
It may be recalled that Torrent Power, on July 13, 2021, informed that the Supreme Court of India has, inter alia, granted stay of the operation of the impugned interim order of Bombay High Court suspending tender process of the above referred bid, and to list the matter for hearing before the Supreme Court of India.
Torrent Power, in the last week of February 2021, had announced that it had emerged as the highest bidder for acquiring 51 per cent stake in the power distribution company of the UT of DNH&DD.
Subsequently, on March 4, 2021, Torrent Power announced that the Bombay High Court has suspended the tender process in the wake of a PIL case filed before the court, until further orders in the matter.
(Featured photograph shows layout map of UT of Chandigarh)
