Tata Power wins two more Odisha discoms

Tata Power on Friday said it received the letter of intent (LoI) from the Odisha Electricity Regulatory Commission for distribution of power to the consumers in western and southern parts of the state through the respective discoms – Wesco and Southco – for the next 25 years. The company had won the bagged CESU, another Odisha discom in December 2019. It is also the sole bidder for Nesco, which the only other discom in the state.

Tata Power will own a 51% stake in the discoms, while the remainder 49% will be held by the government of Odisha.

The four Odisha discoms had cumulatively recorded a loss of Rs 1,539 crore in FY19, of which Nesco losses comprised only Rs 2 crore.

Tata Power has committed to make a capital expenditure of Rs 2,830 crore cumulatively between FY22 and FY26 on Wesco and Southco discoms. It aims to reduce aggregate technical and commercial (AT&C) losses of Southco from the current level of 35.3% to 14.8% in ten years. For Wesco, AT&C losses are targeted to be cut to 9.1% from 27.6% in the same period.

In Delhi, where Tata Power has a similar public-private partnership model with the Delhi government, the company has managed to reduce AT&C losses from the high of 53% in 2002 to around 8% at present. About Nesco, for which the company is the sole bidder, Praveer Sinha, CEO & MD, Tata Power, had told investors in November that “the regulator and the government is taking a view on whether they would give it to us based on our offer or there is going to be a rebid”.

Discom business plays a major role in Tata Power’s five-year planning, as it envisages consumer base in this front to rise to 20 million from the current 2.6 million subscribers. With growing opportunities in discom privatisation, the company is targeting Rs 27,000 crore revenue from transmission and distribution business by FY25. Tata Power’s income from discoms in FY20 was Rs 11,186 crore.

After the recent acquisition of the Odisha discoms, Tata Power currently has the largest consumer base among private discoms. It sees significant privatisation opportunities on the horizon, and expects major discoms in Uttar Pradesh, Odisha, Rajasthan, Madhya Pradesh, Jharkhand and eight Union Territories to be soon offered for private takeovers. “The success of our Delhi, Mumbai and Ajmer Distribution including improvements in central Odisha in a short span of time is winning the hearts of people of Odisha,” Sinha said.

Meanwhile, the company informed the exchanges of Friday that Coastal Gujarat Power (CGPL), the Tata Power unit that runs the 4,000 MW Mundra power plant, has repaid Rs 1,550 crore of bank loans. With this, the unit has cleared its entire bank loans of Rs 4,150 crore. “After this repayment, CGPL’s long-term debt comprises only Rs 3,790 crore of bonds and debentures,” the company said.