Power Bidders Queue Up For Orissa

The central zone in Orissa may prove to be the most lucrative for private power distribution companies despite it recording the highest losses among the four power distribution zones in the state.

Orissa which is the first state to have embarked on power distribution privatisation, has divided the state into four zones _ northern, southern, western and central _ where the government will be hiving off majority stake to the private sector.

A large consumer base and a high level of transmission and distribution losses are some of the factors due to which bidders may attach the highest value to the central zone.

Reliance, Tatas, Enron, Grasim Industries and ModiCorp are among the 11 companies which will are currently evaluating the zones and are expected to put in their price bids shortly.

According to the figures provided by the state government, the central zone has the largest consumer base at 4.57 lakh, while the other zones have an average consumer base of 2-2.5 lakh.

While the central zone is incurring losses of about Rs 197 crore, the western zone showed a profit of about Rs 10 crore for 1996-97.

Despite these current profit and loss figures, bidders will attach greater value to the consumer mix, the consumer base, the transmission and distribution losses and the current level of tariffs.

According to government estimates, the central zone is expected to register profits of about Rs 132 crore by 2002 _ making it the most profitable zone in the state if transmission and distribution losses in the zone are brought down.

On the other hand, similar projections for the western and southern zones indicate marginal increase in profits of around Rs 43 crore and Rs 60 crore respectively.

These profits have been calculated without making any substantial increase in the retail power tariffs in the state.

At present, the state has an average domestic tariff of Rs 1.82/unit and an average industrial tariff of around Rs 2.82/unit.

The overall transmission and distribution losses are around 45 per cent.

A break-up of these losses among individual zones indicates that the central zone has the highest loss of around 50 per cent, meaning the government is effectively billing for only 50 per cent of the population in the zone.

On the other hand, the western zone, which is the only profit making zone, has an average billing of 61 per cent, indicating losses of about 39 per cent.

The central zone's losses are mostly on account of theft (also called non-technical losses), which are as high as 30 per cent, while technical losses are about 20.1 per cent.

Bidders may attach greater value to the potential earnings that can be made by bringing down these losses and make profits _ without having to make substantial increases in power tariff.