CESC To Serve Chandigarh Power Needs, As It Wins Distribution License For the UT

In a stock exchange filing, CESC Limited has informed that  Eminent Electricity Distribution Ltd , its subsidiary has placed the highest bid of ₹871 crore to acquire the electricity distribution business for Chandigarh. CESC is the key discom for Kolkata already, besides some other circles.

The bid was invited by Chandigarh’s engineering department as part of the privatization process of the Union territory’s (UT’s) electricity distribution companies (discoms) for “distribution and retail supply of electricity and having distribution licence in the UT of Chandigarh”. But the process had run into with legal hiccups.

When the financial bids opened on Wednesday, the RP-Sanjiv Goenka Group company emerged as the highest bidder. Torrent Power, state-run NTPC Ltd, and ReNew Power had quoted ₹606 crore, ₹563 crore, and ₹551 crore, respectively, while the Adani Group, Tata Power, and Sterlite Power placed financial bids of ₹471 crore, ₹426 crore, and ₹201 crore, respectively. Deloitte is running the sale process.

Last week, Union power secretary Alok Kumar was quoted as saying the UT discom privatization exercise had progressed, and the Union Cabinet’s approval would be sought to award the Dadar and Nagar Haveli utility. Deloitte is also running the sale process for the discoms in Puducherry and Andaman and Nicobar Islands, while SBI Capital has the mandate for Dadar and Nagar Haveli, Daman and Diu, Jammu and Kashmir, and Ladakh.

Torrent Power placed the highest bid for power discoms of Dadar and Nagar Haveli, and Daman and Diu. The other bidders were ReNew Power, Adani Group, and CESC Ltd. The requests for proposal for the Andaman and Nicobar Islands and Puducherry are being finalized. This will be followed by the process for Lakshadweep utility. For Jammu and Kashmir, a study is being conducted on possible options.

As per power demand data recently published by the National Load Dispatch Centre, the Indian Energy Exchange (IEX) traded 7,322 MU volume and clocked 37% year-on-year growth in July 2021.

The UT discom licenses have value beyond the fact that most serve well established urban areas with higher incomes and consumption. These are the centres where consumption is well above the national average, and also a greater chance to integrate a higher share of renewable energy too. One hopes that CESC, as a laggard when it comes to using renewable energy in its license areas so far, will start making a change towards greener energy, as it serves an ever larger volume of customers across the country.

A very interesting aspect of the union territory markets including Jammu and Kashmir is that they have some of the lowest power rates across the country. It should be very interesting to see how those rates move post privatisation.