Crompton Greaves enters power distribution

The power equipment manufacturing giant Crompton Greaves is making a foray into electricity distribution in Nagpur. The company has bid the highest amount to win the franchising contract from the state-owned power discom Mahavitaran.

Speaking to reporters, Mahavitaran's managing director A B Pandey said, "Crompton Greaves quoted Rs 2.05 per unit as the price for power in the first year of the 15 years franchisee contract which they will purchase from Mahavitaran as against the benchmark Rs 1.70.

In the 15th year of the contract, the company will pay Rs 4.68 to Mahavitaran against the benchmark price of Rs 2.43."

At the end of 15 years contract with Crompton as per our bench mark prices at present tariff level, MSEDCL would have got Rs 1,800 crore but Crompton Greaves has promised to pay Rs 2,600 crore, Pandey said.

This was the highest of the six bidders who submitted bids for securing the franchisee contract for the three divisions of Nagpur city. Among others who bid for the project included Tata Power, Torrent Power, Madhukon and Kalptaru, he added.

As per the guidelines set in the Electricity Act of 2003 Mahavitaran has decided to give out six cities and towns in Maharashtra where the percentage of transmission and distribution losses (T&D) is over 35 per cent to improve efficiency and increase the revenue of the organisation.

The average T&D losses in the three divisions of Nagpur being given out to franchisee is around 42 per cent. This includes Gandhinagar, Mahal and Civil Lines, Pandey said while replying to a question.

The other cities which will be given out to franchisees includes Aurangabad, Ahmadnagar, Jalgaon, Malegaon, Ulhasnagar, Kalwa-Mumbra.

We have made some improvements in the tender conditions over our previous experience of giving out the Bhiwandi division to a franchisee. Now it has been made mandatory for franchisees to cut the T&D losses and the franchisee will have to stick to the schedule of loss reduction given by the Mahavitaran.

In the first year the firm will have to cut losses by 10 per cent in second year 6 per cent and so on. And at the end of 14th year, the franchise will have to meet the target of reducing losses to a minimum of 20 per cent, Pandey said while elaborating on the contract.

Besides, if the contractor manages to cut the losses below 20 per cent then he will have to buy extra power from whichever source available and make the area catered by him load-sheading free. However, franchise will have a right to recover the extra cost, he would required to incur to buy power. This concept is based on the Pune model, he added.