CESC Ltd has been able to turn around two of its three distribution franchise licences in Rajasthan within four years of taking over the operation even as the largest of the pack continues to struggle.
The company, which holds a licence for electricity in Calcutta and the adjoining areas, won bids for Kota, Bharatpur and Bikaner in 2016 as the flagship of RP-SG Group shifted its focus from power generation to distribution.
While the Bhratpur operation met with success within the second year of full operation, Bikaner turned the corner in the last fiscal, the latest annual financial statement shows. Kota, the largest DF among the three, however, slipped further. See chart
Power industry executives say success of a distribution franchise model depends on several factors. As the DFs are usually required to purchase power at a fixed tariff from state-run producers, the name of the game is to reduce transmission & distribution losses and power theft.
“Political support plays an important role in the success of a DF model. If CESC has been able to make Bikaner and Bharatpur work but struggled in Kota, it is likely beyond the control of the company,” the executives said. CESC did not offer comment to the story.
Kota’s T&D loss is the highest within the CESC universe, which includes the Greater Noida licence apart from Calcutta. The operation at Malegaon has started only at the end of last year.
Losses at Kota stand at 20.4 per cent in 2019-20, down from 32 per cent at the time of the takeover. In Bharatpur, the loss has come down to 12.3 per cent in the last fiscal from a high of 32 per cent while in Bikaner, it has come down to 14.4 per cent from a high of 28 per cent. Compared with the DFs, the T&D loss at Calcutta stands at 8.96 per cent and 8.12 per cent in Noida, according to a November 2019 investor presentation made by the company.
Kota, the coaching capital of the country, is the largest licensee in area and population among the three. It has 2.59 lakh customers compared with 1.64 lakh in Bikaner and 70,000 at Bharatpur.
CESC replaced open cables with armoured ones to stop theft. Old meters were replaced and gland sealing of the boxes were done. CESC is also focusing on regular reading of meters and accuracy testing on high-end consumers.
To prevent losses, armoured cables were used to replace open cables which stops illegal theft. Further, replacement of old meters of the state power PSU and gland sealing of meter boxes were also done. It is also focusing on regular reading of meters and accuracy testing on high end consumer meters.