CESC secures power distribution contract in Nigeria

CESC Ltd today said it has bagged a contract to distribute power in the Nigerian city of Port Harcourt.

CESC, which has won the distribution franchisee bid as part of consortium of Nigerian partners and investment firms, would cover 48,000 sq km and expected an annual turnover of $180 million, CESC Chairman Sanjiv Goenka told reporters here today.

CESC's role will be a technical service provider in network planning, supervision of implementation plan and improvement of efficiencies of the discom, he said.

"The fee will be approximately $2.5 million per year (five-year renewable). It will be entitled to incentives on achievement of more than 80 per cent of loss reduction target (each five partners getting 12.5 per cent of additional revenue)," he added.

Goenka said the company had an option to invest up to 6 per cent in the distribution company through a special purpose vehicle.

CESC had participated in the bid for two discoms floated by the Government of Nigeria, which is in the process of privatisation of the distribution business by offering 60 per cent stake in 11 discoms.

The Kolkata-based company had recently announced intent to acquire a substantial stake in BPO service provider Firstsource Solutions (FSL).

The deal, although received a thumbs down from market participants, has not touched the confidence of the RP Sanjeev Goenka Group.

"As a person who is responsible for steering the company, I cannot look at three-6 months. I am looking at a longer term and am confident about the step we have taken. We needed to have some business outside a government-regulated business (like power) and look for growth opportunities. We can add value to that company and I believe that in two years, it will be a completely different story," he said.

CESC has also recently announced its plans to list its retail arm Spencer's Retail and is finalising merchant bankers for advisory at this stage.

The company said it was weighing options like mirror level demerger from the parent company, initial public offering, and induction of a strategic investor for listing of Spencer's Retail.