Tata Power owns CESU Odisha license for Rs.175 Crore

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Tata Power on 2019 December 23 said it has bagged a 25-year licence for distribution and retail supply of electricity in Odisha’s five circles, together constituting Central Electricity Supply Utility of Odisha (CESU) for about Rs 175 crore.

Company chief executive officer and managing director Praveer Sinha said a special purpose vehicle will be formed in which the company will own 51% and the balance 49% will be owned by the Odisha government. The deal values CESU at Rs 350 crore.

Sinha said the contract puts in place a trajectory for loss reduction of CESU. Tata Power outbid India Power Corporation Ltd for bagging the contract.

In a regulatory filing the company said the Odisha Electricity Regulatory Commission (OERC) has awarded the Letter of Intent (LOI) to Tata Power Company Ltd for the acquisition of CESU Power Distribution in Odisha.

The five electrical cirlces constituting CESU are the areas of Bhubaneswar (Electrical Circle – I and II), Cuttack, Paradip and Dhenkanal.

The license is being offered for 25 years initially.

“The proposed sale of CESU to Tata Power will be through the formation of a special purpose vehicle entity. Tata Power has been informed that Government of Odisha will own 49 per cent equity stake in the proposed SPV and Tata Power will hold 51 per cent equity with their management,” the filing added.

Presently, Tata Power has total consumer base of 2.5 million across Mumbai, Delhi and Ajmer and with the acquisition of CESU, its consumer base would double and touch five million consumers.

CESU is spread over 30,000 Sq km with population of over 1.4 crore and consumer base of 2.5 million. The average demand of CESU is around 1,300 MW with the annual input energy of 8,400 MUs (FY2018).

“Recently, our focus has been on increasing the company’s existing footprint in distribution of electricity through Public-Private-Partnerships (PPP) with discoms. This tie up with CESU is the latest such partnership in the distribution business,” Tata Power CEO & MD Praveer Sinha said.

Tata Power is a leading integrated power company and, together with its subsidiaries and jointly controlled entities, has an installed capacity of 10,763 MW.