OERC revokes licenses of three discoms in Odisha

Odisha Sun Times Bureau
Bhubaneswar, Mar 4:

The Odisha Electricity Regulatory Commission (OERC) today revoked the licenses issued to three distribution companies (discoms) NESCO, WESCO and SOUTHCO managed by the Reliance Energy Ltd (REL) on the grounds of unsatisfactory performance by them.

(source: tradearabia.com)
(source: tradearabia.com)

“The license of the three companies working under REL has been revoked. The chairman and managing director (CMD) of Grid Corporation of Odisha (GRIDCO) has been appointed as the administrator of these three companies with immediate effect. He has already taken over the charge from this morning. This decision will not affect the GRIDCO sanctioned employees of these three discoms. However, the employees of Reliance, including their CEO and MD will have to go. The GRIDCO CMD has been specifically asked to ensure that the decision does not affect the consumers,” principal secretary, Energy, Suresh Chandra Mohapatra, told the media.

The discoms had been under the scanner for failing to invest in improving distribution infrastructure. The company was seeking frequent upward tariff revision of tariff without caring for reduction of aggregate technical & commercial (AT&C) losses, sources said.

OERC had set a target for these companies to reduce losses and asked them to invest in infrastructure. It had also served a show cause notice to them in this regard. The companies, however, failed to meet the performance targets of OERC, which led to the decision to delicense them.

It may be noted that the state government had revoked the license of these three discoms in 2005. However, challenging the decision of the government, they later had moved the Central Electricity Regulatory Commission (CERC) and the Supreme Court.

But as performance of the companies never improved, OERC had lodged a suo motu case against them along with a show cause notice asking why their license should not be revoked.

“Though the discoms had been working since last 15 years, the improvement was not satisfactory. They were unable to bring down the AT & C loss, which stayed at 40 percent in contrast with Delhi and Mumbai where the loss was only 15-20 percent. The discoms did not invest a single pie from their own funds to improve the infrastructure, which forced the Commission to revoke their license,” Mohapatra informed.

“The companies had set a target to bring down the AT & C losses to 21 percent, which they were not able to meet. They have not invested in the infrastructure as directed by OERC, which later served them a show cause notice. The discoms later went to the tribunal complaining that they have not been given sufficient time to improve their performance. Though the Commission had given specific instruction to these companies while pointing out their areas of improvements, the performance was not satisfactory which led to this decision,” said KC Badu, former member of OERC.


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