Deloitte, SBI Cap to advise on privatisation of discoms

Govt is looking at completing the process before December

NEWDELHI: Deloitte and SBI Capital Markets Ltd (SBI Cap) have been hired as consultants to help with the privatisation of electricity distribution companies (discoms) in Union territories, two people aware of the development said.

While state-run Power Finance Corp. (PFC) has appointed Deloitte to help with the sale process to privatize discoms in Puducherry, Chandigarh and Andaman and Nicobar Islands, SBI Cap has received the mandate for Dadra and Nagar Haveli, Daman and Diu, Jammu and Kashmir, and Ladakh. Lakshadweep is not being considered in this phase of privatization because of its low electricity load.

A Union power ministry spokesperson confirmed the development.

The appointment of these consultants to help with the preparatory work for the exercise, expected to be completed by December, shows that India has stepped up efforts to usher in next-generation power sector reforms. The power ministry will issue the standard bidding documents. Mint reported on 15 May about India’s plan to privatise all electricity discoms in Union territories that together have an enterprise value of around $700 million.

“The government is looking at completing the process before December. The mandate is to complete the exercise within eight months starting June,” said one of the people cited above.

Unlike discoms in states, which fall under the remit of state governments, those in the Union territories are administered directly by the Centre.

A Deloitte spokesperson in an emailed response said, “We are bound by confidentiality obligations and are unable to comment on client-specific matters.”

Queries emailed to spokespeople of SBI Capital Markets Ltd and PFC on early Friday morning remained unanswered.

With their financial health weakened by the prolonged lockdown, states are gradually coming around to the idea of privatizing their debt-laden discoms to raise funds.

There is growing interest in the UT discoms on offer. Mint earlier reported that local companies such as state-run NTPC Ltd, electricity generation and distribution firm CESC Ltd, Torrent Power, Greenko Group, Tata Power, National Investment and Infrastructure Fund (NIIF) and Adani Group may be interested in the assets. Large foreign utilities such as Italy’s Enel Group, Malaysia’s Tenaga Nasional Bhd, Electricite de France SA and Hong Kong’s biggest electricity provider China Light and Power Co. Ltd are also expected to participate. A third set of probable investors include funds such as Brookfield Asset Management Inc., CDPQ, CDC Group Plc, Macquarie Group and Actis Llp.

The race for securing discom licences is heating up. Billionaire Gautam Adani-owned Adani Group, Rp-sanjiv Goenka group’s flagship electricity generation and distribution firm CESC Ltd, and Tata Power Co. Ltd are among those who have shown interest in acquiring Odisha’s three electricity discoms. Also, NTPC Ltd has evinced interest in acquiring a 51% stake each in BSES Rajdhani Power Ltd and BSES Yamuna Power Ltd in Delhi. Enel Group of Italy, Torrent Power Ltd and Greenko Group have also submitted nonbinding offers to pick up stakes in the two Reliance Infra entities.