Reliance, Tata in race for power distribution licence

Private power distribution majors and public sector undertakings, have recently filed expression of interest (EoI) with Gujarat Electricity Board (GEB), for the power distribution rights in cities except in Ahmedabad and Surat.

GEB holds the generation, distribution and transmission rights in the state except in Ahmedabad and Surat where power distribution is in the hands of two companies under Torrent Group.

Heavyweights such as Reliance Energy, Tata Power, Iffco, National Thermal Power Corporation (NTPC) have filed their EoIs wih GEB. The Board will invite tenders from these companies soon.

Saurabh Dalal, minister of state for energy, said, "Around six months back to test the market response, we invited EoIs from private companies to run power distribution in cities and towns such as Bhavnagar, Rajkot, Vadodara. But we have received overwhelming response from 17 major companies including private sector entities such as Reliance and Tatas. This will be now followed by a national tender which we are planning to issue shortly and the companies which will be selected through the tender process, will have to run power distribution in the select locations on a franchisee model for which a framework already has been finalised by the government."

The franchisee model will reduce transmission and distribution (T&D) losses incurred by GEB. But there be no retrechenment of GEB employees and also no hand over of assets of the Board to private parties.

Dalal said, "The corporates will sign a revenue sharing pact with GEB which will ensure that only the increased portion in revenue generation from that particular city or town, would be shared between GEB and the franchisee. The franchisee will also require to bring in its own expertise and investment to make this a profit-making proposition for the Board."