Odisha Sun Times Bureau
Bhubaneswar, May 24:
The Odisha government has initiated the process for selling off the lucrative power distribution company (discom) Central Electricity Supply Utility of Odisha (CESU).
After managing the operation for CESU for more than eight years, the Odisha Electricity Regulatory Commission (OERC) has begun the exercise by publishing an advertisement seeking expression of interest (EoI) for appointment of a transaction advisor.
The regulator has invited EoI from financial institutions, reputed merchant bankers, investment banks and consulting firms with experience in privatization or strategic sale.
The onus will be on the transaction advisor to offer advice, prepare a detailed Information memorandum, market the offer, invite and evaluate the bids, assist OERC during the negotiation with prospective bidders, draw up the agreements and the documents for the transaction and help CESU/OERC and the successful bidder in post transaction activities including accounting and tax matters, said a notification by OERC.
Based on the parameters provided by the transaction advisor, OERC will short-list the prospective advisors and thereafter issue a ‘Request for Proposal’ from among these advisors.
It may be noted that OERC is managing CESU (earlier known as Central Electricity Supply Company of Odisha Ltd) ever since AES, the US utility major, the majority stake holder of the company, unilaterally withdrew from its management in 2001.
However, OERC revoked the distribution of licence of CESU under Section 19 of the Electricity Act, 2003 (the Act) with effect from April 1, 2005 and allowed the company to distribute power in the region allotted to it through a special scheme under Section 22 of the Act.
Initially, the tenure of the scheme was two years. The tenure has been extended periodically by the OERC and presently the scheme is extended till September 2015.
After revocation of the license, the OERC initiated the process for sale of the discom but the exercise did not go very far.
Sources said sale of CESU may include acquisition of all its assets, taking over the employees at existing terms of employment, settlement with the employees not taken over and assumption of the whole or part of the liabilities and exclusion of some liabilities in the scheme of acquisition.
The OERC’s fresh move to sell off the discom is being vehemently opposed by the power utility’s employees.
CESU employees have alleged that Odisha was the first province in the country to start privatization of power distribution but private companies looted hundreds of crore rupees without making any improvement in infrastructure, forcing the government to cancel agreements with them.
CESU currently has 16 lakh employees working under it and is running in loss to the tune of Rs 2,000 crore.