According to two people aware of the development, while Torrent Power bid around ₹555 crore for acquiring 51% stake in the discoms of these two union territories (UTs); its bid was followed by that of ReNew Power Ventures Pvt. Ltd and Adani Group, with each bidding around Rs450 crore. Kolkata based CESC Ltd bid around Rs300 crore in the sale process run by SBI Capital Markets, as part of the discom privatization exercise for the eight Union territories.
The bids were opened on Saturday. India seeks to privatize the discoms for eight Union territories for an enterprise value of around $700 million. Unlike the discoms run by state governments, discoms for the Union territories are administered by the Centre.
“Torrent Power Limited (the “Company”) today emerged as the highest bidder for the sale of 51% stake in the Power Distribution Company in the UT of Dadra & Nagar Haveli and Daman & Diu. The acquisition of 51% stake in the power distribution company by Torrent is subject to further formalities as prescribed under the tender documents,” Torrent Power said in a statement.
This comes in the backdrop of India working on next-generation power sector reforms as articulated by Prime Minister Narendra Modi on Thursday.
“With the addition of Dadra & Nagar Haveli (including Silvasa) and Daman & Diu, Torrent will distribute nearly 25 billion units to over 3.8 million customers and cater a peak demand of over 5000 MW,” the statement added.
Experts say a premium has been quoted in the bids for these two discoms; given the removal of entry barriers, possibility of additional revenue streams, and a favourable consumer mix.
A SBI Capital Markets spokesperson declined comment.
Queries emailed to spokespersons of ReNew Power, Adani Group and CESC on late Saturday afternoon wasn’t immediately answered.
“The successful bidder will acquire 51% now, with an additional 23% to be acquired by the end of third year,” said one of the two people mentioned above requesting anonymity.
The Rs21,500 crore Torrent Group is one of India’ largest integrated power utility with presence across generation, transmission and distribution space. It supplies electricity to 3.65 million customers in Ahmedabad, Gandhinagar, Surat, Dahej special economic zone, Dholera special investment region, Bhiwandi, Shil, Mumbra, Kalwa and Agra.
“With this acquisition, Torrent will be entrusted with the responsibility to distribute over 25 billion units of power, which is equivalent to around 2% of India’s total power consumption,” Torrent Group chairman Samir Mehta said in the statement.
Torrent Power, ReNew Power and Adani Group have also bid to acquire the Chandigarh discom, as part of India’s efforts to privatize UT discoms as reported by Mint earlier. The other bidders for the Chandigarh discom sale process run by Deloitte are NTPC Ltd, Tata Power, and Sterlite Power. The bids for Chandigarh discom sale are yet to be opened.
Apart from Chandigarh, Deloitte is also running the sale process for the discoms in Puducherry and Andaman and Nicobar Islands, and SBI Capital Markets Ltd also has the mandate for Jammu and Kashmir and Ladakh discoms.
The discom privatization plan for Union territories was articulated by finance minister Nirmala Sitharaman when she announced the fourth tranche of the ₹20 trillion stimulus package to fight the covid-led economic crisis.
Odisha was the first state to privatize its power distribution sector into four discoms in 1999. This was followed by Delhi, which privatized three of its discoms in July 2002: BSES Rajdhani Power Ltd (BRPL), BSES Yamuna Power Ltd (BYPL) and Tata Power Delhi Distribution Ltd.
PM Modi said on Thursday that an electricity consumer should be able to choose his supplier like any other retail commodity. He added that work is on to free entry barriers for the power distribution sector as well as licensing for distribution and supply.
The ongoing budget session in Parliament will consider the Electricity (Amendment) Bill, 2021, with proposed amendments, such as measures to “de-license” the power distribution business and make the sector more competitive.