Eight companies compete for Orissa power sale.

Vol 9, PW 15 (03 Nov 05) Midstream & Downstream

Complaints that communist parties in government are blocking Indias disinvestment programme have not extended to the sale of Orissas state distribution company: Central Electric Supply Company (CESCO).

Eight companies are in the race to buy CESCO and by the 25th October deadline, NTPC, Tata Power, Torrent Group, Calcutta Electric Supply Company, GMR, Jindal South West, Essar Power and KSK Energy had bought tender documents, following a Notice Inviting Tender on 3rd October. All eight competitors submitted Request for Qualification documents on 31st October.

They all meet the minimum eligibility criteria and hence will all most likely be pre-qualified. By the end of November, Request For Proposal documents will be sent to the pre-qualified bidders.

CESCOs sale is overseen by the Orissa Electricity Regulatory Commission, which terminated the companys distribution licence and took over its assets from AES of the US on 31st March 2005. Under the terms of the Electricity Act 2003, the Orissa regulator cannot hold on to a company for more than a year.

This means a buyer must be found by 1st April 2006. CESCO has had a turbulent history.

It emerged when the Orissa State Electricity Board was unbundled into a generation, distribution and transmission company. The distribution company was split up into four parts: Northern Electric Supply Company, Western Electric Supply Company, Southern Electric Supply Company and CESCO.

NESCO, WESCO and SESCO are with Reliance Energy. In 1998-99 AES bought 51% stake in CESCO and the balance was bought by state-owned GRIDCO, later renamed Orissa Power Transmission Company.

AES ran CESCO for two years but walked out in mid-2001 ending a controversial tenure marked by violence and bad behaviour. Claims and counter-claims ensued and in March this year, the Orissa regulator terminated the companys licence and took over its assets.

Despite the troubles that led to AES walking out, CESCO is very much in operation and is now controlled by an administrator appointed by the regulator.