CESC unbundling plan on backburner

CESC Ltd which was toying with the idea of unbundling its generation and distribution business into two separate entities has shelved the plan.

The company now intends to keep both the business under the same company.

"Keeping the two businesses "" distribution and generation under CESC itself would be beneficial in terms of balance-sheet perspective and so CESC does not intend to separate the two aspects," explained Sumantra Banerjee, managing director. CESC Ltd at the sidelines of a press conference to announce the lunch of a ICICI-CESC co-branded credit card.

Asked on the status of the 250 MW third power plant unit at Budge Budge which had sometimes back received the West Bengal government's environment clearance, he said it was awaiting a green signal on environmental issues from the central government.

"We intend to commence the project as soon as we receive the Central Pollution Control Boards clearance," he added.

With infrastructure and land ready, the new plant would cost around Rs 1000 crore. CESC would fund it on a 70:30 debt equity basis.

The company has initiated talks with International Finance Corporation (IFC) for partial project funding. "CESC met IFC recently but details are yet to be worked out," Banerjee explained.

CESC would approach other existing lenders on part financing the new project.

"CESC needs Rs 700 crore from existing and new lenders. CESC is hopeful that existing lenders would agree to finance the project now that the company has returned to the black and was profitable," he said.

On the issue of unbundling, Banerjee said that the new Electricity Act required separate accounting for generation and distribution, and it would be convenient to keep both the aspects of the operation under a single entity.

Meanwhile, ICICI Bank and CESC today officially launched its CESC-ICICI cobranded credit card which would allow CESC consumers to pay electricity bills through the card.

The card will enable consumers multiple options for bill payment, including issuance of standing instructions and using an on-line payment gateway on the CESC website in the near future.

Besides easy bill payment options, the card will be offering benefits like two per cent cash back on electricity bill for consumers using standing instruction facility and free credit of up to 50 days.

The card will also carry other normal features of an ICICI Bank silver credit card, with reward points and insurance.

Sanjiv Goenka, vice-chairman of CESC, said while launching the card, "This would be win-win situation for 1.9 million CESC customers."

Kalpana Morparia, deputy managing director, ICICI Bank said the bank was talking to a host of other utility companies for launching co-branded credit cards.

"As much as 60 per cent of revenue from card business is from co-branded credit cards and we are talking to a host of other utility companies for enhancing this ratio."