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Third bid to get private power players on board

Patna, Oct. 6: Bihar State Electricity Board has decided to float a fresh tender to hand over the distribution network of the state capital to private players.

This is the third attempt of the Bihar State Electricity Board (BSEB) to privatise the service.

Earlier, the BSEB had cancelled Essar Power’s bid for appointment of distribution franchisee in the state capital.

“We are trying our best to float the tenders as soon as possible to appoint distribution franchisee for the state capital and other cities. We are working on it and the tender would be issued by the end of this month (October),” board member (finance and revenue) Vinayak Chandra Gupta told The Telegraph.

The appointment of franchisee is expected to improve power supply and maintenance work of lines, power sub-stations and transformers, as several things, presently undertaken by the board, would be handed over to the franchisee.

The franchisee’s job would be to supply and distribute electricity, generate and deliver bills, taking down meter readings, revenue collection, maintenance of low tension (LT) lines and attending fuse-off calls.

On the delay in issuing tender, he said there was no question of delay as the board had cancelled Essar Power’s tender on September 20 and the process could be initiated only after cancelling the earlier successful tenderer.

“Things are being worked out. Sometimes completing formalities take some time. The tender would be issued keeping in mind the standard bidding document which has been issued by the power ministry in consultation with all stakeholders such as power boards, distribution franchisees and others to create a win-win situation for all,” Gupta said.

The appointment of distribution franchisee is necessary if the state electricity board wants to reap the benefits of the Centre’s Rs 1.9-lakh crore debt restructuring package announced in the last week of September this year.

The Centre has linked the restructuring package with performances of state electricity boards under which the boards have to commit power tariff hikes annually and other measures such as privatisation of distribution through franchisee arrangements, pre-paid metering for government consumers by March 31 next year.

The state power board would neither be a major gainer nor a loser from the central government’s announcement as BSEB owes only Rs 2,000 crore in comparison to Rajasthan, Uttar Pradesh, Tamil Nadu and Punjab, which together constitute Rs 96,000 crore of total debt of Rs 1.9 lakh crore. Bihar power board also owes its loan to the state government.

The two attempts of the board had failed in the past.

In 2009, BSEB had placed a request for proposal for appointment of distribution franchisee in Patna, Muzaffarpur, Bhagalpur and Gaya to hand over the power supply system to private players.

Subsequently, a host of power firms bid for the franchisee in which Gudyne Power Limited and CESC were the highest and second highest bidders respectively. Later, CESC, the second highest bidder, became the highest bidder as Gudyne was held ineligible for participating in the bid after its partner stepped out of the consortium.

In 2011, the board cancelled CESC’s bid, saying that it would lose heavily if it awards bid to CESC as the tender was floated in 2009 on the basis of tariff rate of 2007-08.

In July this year, a single bench of Patna High Court allowed Essar’s plea and asked the BSEB to take a final decision for appointment of franchisees in Patna and Muzaffarpur.