Crompton to distribute power in 3 Nagpur areas

MUMBAI: Engineering major Crompton Greaves has won the bid to distribute and bill power in three major divisions in Nagpur. The other bidders in the ring were Kalpataru Power Transmission, Madhucon Projects, Torrent, Tata Power and Wipro.

There are over three lakh consumers in the three divisions, Maha Vitaran managing director Ajay Bhushan Pandey told media persons on Tuesday.

The state utility’s earlier attempt at entrusting power distribution and billing to private players had been a success in Bhiwandi, which was handed over to Torrent Power last year. Following this the utility decided to rope in private franchisees to run operations in those revenue circles that are high on consumption, but report maximum transmission and distribution (T&D) losses.

Maha Vitaran would sign a distribution franchisee agreement with Crompton Greaves within a week, but it would be operationalised inly by January 2008, Mr Pandey said. Maha Vitaran will approach the Maharashtra Electricity Regulatory Commission (MERC) within a fortnight to seek its nod for the deal.

As per the distribution franchisee framework, Crompton Greaves would carry out all operations — distribution, maintenance, new connections and billing — that the state utility conducts at present.

The franchisee would pay a fixed amount to Maha Vitaran every month, which has been calculated on the basis of a 5% rise in demand every year. Under the agreement — which is for 15 years — Crompton Greaves would fetch the state utility Rs 2,600 crore from the three divisions, against a benchmark minimum amount of Rs 1,600 crore. The benchmark recovery amount for 15 years has been calculated by the rating agency Crisil on the basis of its evaluation of the net present value of all the bidders.

Asked about the employee unions’ opposition, Mr Pandey said the franchisee option is part of a national policy under the Electricity Act, 2005, to reduce losses and provide quality service to consumers.

“Only heavy loss-making and high-consumption circles are being handed over to franchisees. We have told the unions that not a single job would be taken away,” Mr Pandey clarified. Next on the franchisee agenda are Aurangabad, Ulhasnagar, Kalwa, Ahmednagar, Jalgaon, Malegaon and Dhule.

The bid documents for this were prepared on the basis of Maha Vitaran’s transmission and distribution losses for low tension (LT) supply in 2005-06. The agreement with Crompton Greaves puts a benchmark of 20% losses, as against 42% in 2005, with a mandatory condition that the franchisee would make the three divisions free from load-shedding if it brought down the losses below 20%.

“The agreement provides that the franchisee would make the area load-shedding free by bringing down the losses below 20% and buying costly power from wherever possible. It also allows the franchisee to recover extra money from the consumer for costly power purchase,” Mr Pandey added.

The mechanism also makes it mandatory for Crompton Greaves to cut down the losses to 12% by 14th year of the contract. The tariff quoted by Crompton Greaves for the first year is Rs 2.05 per unit for low-tension supply against the benchmark rate of Rs 1.7 per unit.

For the 15th year of the agreement, it would charge Rs 3.69 per unit against the tender rate of Rs 2.43 per unit. For high-tension supply, the tariff quoted by Crompton Greaves is Rs 3.19 per unit for the first year and Rs 4.3 per unit for the 15th year, against the benchmark rate of Rs 3.18 per unit.“Wipro’s bid got disqualified as it had put certain conditions,” Mr Pandey said.