CESC Ltd on February 7 said it had secured through competitive bidding, the franchise to distribute power in Bikaner as it looks to ramp up revenue from electricity sales in three towns of Rajasthan to Rs1,200 crore in the next fiscal year.
CESC currently supplies power in Bharatpur and Kota, having taken over the franchises from the state government. The company says it is impressed with the administrative support it has received from the state government of Rajasthan as it revamps the local power distribution business, where losses are high due to poor metering and power theft.
Transmission and distribution (T&D) losses in Rajasthan have already been brought down to less than 30%, a spokesperson for CESC said.
The situation in Bikaner is better than the rest of Rajasthan where T&D losses are at 24.5%—one of the lowest in the state—according to the spokesperson. The company has committed to invest a minimum of Rs115 crore in the distribution grid within five years, and expects Rs350 crore in annual revenue from Bikaner.
The operation in Bikaner is expected to turn profitable from the second full year of operation, when T&D losses would stabilise, according to the spokesperson. The franchise is spread over 155 sq. km and has 142,000 consumers. The city of Bikaner has a population of 644,000 people and a peak demand of 130 megawatt.
CESC has gained "valuable experience" from customer-focused initiatives launched at Kota and Bharatpur, group chairman Sanjiv Goenka said in a statement. At Bikaner, the company will follow the same principal to gain acceptability among consumers and bring down power theft.
In Kota, half of CESC's consumers are residential and the rest commercial. In Bharatpur, however, 90% of its consumers are residential, according to an analyst at Ashika Stockbroking Ltd, who asked not to be named.
Because of the high concentration of commercial consumers in Kota, CESC has good opportunity to make profits, this person said, adding that the management of the power utility has in the past indicated that it is confident about bring down T&D losses from 30% to 10% over the next few years.
CESC has done that in Kolkata, and expects to repeat it in Rajasthan at a much faster pace, he added.
But the spread is thin, according to him. CESC buys power at Rs4.26 and sells for an average tariff of Rs4.70 a unit (or one kilowatt-hour).