REL to bid for five UP distribution companies

Reliance Energy has decided to participate in the international bidding of five power distribution companies which the Uttar Pradesh government has put up for divestment. The decision to bid for these companies was taken on November 30 at its board meeting here.

The decision comes at a time when Reliance Energy has decided to consult Reliance Industries, which holds a 50.2 per cent stake in Reliance Energy, on gas supplies and related issues.

A Reliance Energy press release today said: "The investment decision, however, would take into account the transaction structure, support from various stakeholders, etc".

It is not clear whether the Reliance Energy board will put these plans up to the Reliance Industries board for approval.

Repeated attempts to get in touch with the Reliance Energy spokesman proved futile. A Reliance Industries spokesman declined to comment.

The five UP government companies have an aggregate annual revenue of about Rs 7,500 crore and are responsible for the distribution and supply of electricity in Uttar Pradesh and are headquartered in Meerut, Agra, Lucknow, Varanasi and Kanpur.

These distribution companies cater to about 8.5 million consumers over 240,000 sq. kms with a peak demand of about 6,500 mw.

According to a media release, Uttar Pradesh has more than thrice the number of electricity consumers that Delhi has and the demand for power and revenues are almost double those of Delhi.

"The current disinvestment opportunity is the first of its kind after the enactment of the Electricity Act, 2003, and is in line with the reform objectives of the UP power policy, 2003. The disinvestment is a part of an extensive reform program undertaken by the state government in the power sector and is supported by the World Bank," the release stated.

The release further adds that "the distribution in Uttar Pradesh is in line with Reliance Energy's philosophy of distribution led growth. UP has the largest population and second largest economy in the country and has large un-electrified areas, thereby offering significant opportunities for growth. Reliance Energy seeks to utilise its unparalleled and varied experience in Mumbai, Delhi and Orissa to participate and if successful, undertake distribution in the state".

The Uttar Pradesh government has decided that its divestment process will take place in two stages ""- pre-qualification of bidders, followed by financial bids.

The entire transaction is scheduled to be completed within this financial year, the release said.