Tata Power set to clinch power distribution licence in central Odisha

Tata Power is set to clinch the power distribution licence in the Central Odisha area, making it the third licence for the company after Delhi and Mumbai.  Sources said Tata Power’s bid has been finalised for the tender floated for distribution and retail supply of electricity in the circles of Bhubaneswar, Cuttack, Paradeep and Dhenkanal. 

This is Odisha’s second attempt at privatising its power distribution. It already has successful distribution franchisees in different areas of the state.

The state has offered three more regions for private power distribution and 15 divisions under Central Electricity Supply Utility of Odisha (CESU) under different ‘distribution franchisee’ models. Odisha’s electricity department has four regions – North, South, Central, West and North East. 

With this, Odisha will become the first state in the country to completely privatise its power distribution under different models. 

Officials said the technical bid of Tata Power has been approved and its financial bid is being evaluated. The bidding was conducted by the Odisha Electricity Regulatory Commission (OERC).

Tata Power, in an emailed response, said, “We have submitted the bids for CESU’s public-private partnership (PPP) project. The technical and price bids have been opened. The evaluation process is on. We are yet to hear from the OERC (which had carried out the bidding process) on the outcome of the bids.” 

Sources said Tata Power Delhi Distribution Company Limited (TPDDL), which operates the Delhi power distribution, will implement the project in Odisha. 

“This is the first such area under private licence which has a mix of both rural and urban population, which is unique for any private company. The loss in these areas is reported to be as high as 30-35 per cent. This needs to be reduced to accrue tariff benefits for consumers,” said an executive of the company. An area under operation covers close to 25 lakh consumers. Since the model of the project is PPP, asset ownership remains with the state government. 

The private player is responsible for maintenance, operation and upgrade of the distribution network and supply of electricity. The proposed targets include reduction of technical as well as commercial losses and power cuts, improvement in the quality of power, infrastructure strengthening and providing affordable electricity.  All states have government-owned power distribution companies, most of them being in the red. 

The central government recently proposed a draft model plan for states to have multiple private franchisees as power suppliers to reduce losses and improve efficiency. 

So far, Mumbai and Delhi are the two cities where power distribution has been privatised. In both cases, the model has worked to either improve efficiency or bring down losses. Until 2018, Reliance Infrastructure and Tata Power were the only two players in the power distribution privatisation space.

Adani Transmission, however, made a big entry into the segment through purchase of R Infra’s Mumbai distribution business in August 2018.