Torrent Power expects capital expenditure of Rs.500 crore in the Dholera Special Industries Region (DSIR) for which the Gujarat-based company was given the mandate of an additional distribution licencee last year. Torrent Power expects the investment to made over the next five years, it said in a recent investor presentation filed on the stock exchanges.
It may be recalled that in August last year, Gujarat Electricity Regulatory Commission decided to award the DSIR electricity distribution licence to Torrent Power, after hearing objections and suggestions of stakeholders. In its order, GERC said that Torrent Power shall power through competitive bidding after following due process according to provisions of the Electricity Act, 2003.
Torrent will be allowed to supply power to new industrial, commercial and residential units that will come up in DSIR, which is spread over an area of 920 sqkm. The distribution licence period will be 25 years. Dholera SIR is a major project in the Delhi-Mumbai Industrial Corridor (DMIC), to be developed into a global manufacturing hub supported by world class infrastructure. “A new state-of-art network & a large industrial base will ensure minimal T&D losses and low cost of supply,” Torrent said in the presentation.
Torrent said that it will adopt the cost-plus return on equity (ROE) model, ensuring at least 14 per cent post-tax ROE.
The existing licencees at DSIR, Paschim Gujarat Vij Company Ltd (PGVCL) and Uttar Gujarat Vij Company Ltd (UGVCL), both state-owned power discoms, continue to serve their consumers and will give new connections as well by extending their network. According to the provisions of the Electricity Act, an electricity regulatory commission is empowered to grant licences to two or more entities for distribution in the same area.
| Torrent Power Ltd: Power distribution business | ||||||
| Licensed Distribution | Franchised Distribution | |||||
| Ahmedabad/ | Surat | Dahej | Bhiwandi | Agra | ||
| Gandhinagar | ||||||
| Licensed Area | 356 sqkm | 52 sqkm | 17 sqkm | 721 sqkm | 221 sqkm | |
| Peak Demand | 1906 MW | 687 MW | 66 MW | 555 MVA | 458 MVA | |
| License Validity | Till 2025 | Till 2028 | Till 2034 | Till Jan 2027 | Till March 2030 | |
MSEDCL franchise
Torrent Power also expects to invest a total of Rs.300 crore in the Shil, Mumbra & Kalwa areas of Maharashtra State Electricity Distribution Company Ltd (MSEDCL) for which Torrent has been mandated as the distribution franchisee for a 20-year period. Of the total investment, Rs.150 crore will be invested in the first five years, Torrent Power said.
The given area had suffered AT&C losses of as much as 47 per cent during FY17. Torrent expects that these losses will be brought down to 12 per cent by the end of the 15th year. The business will turn profit-making (P&L accretive) in five years, the company said.
Nearly 1,400 sqkm of command area
Excluding the newly awarded DSIR and MSEDCL areas discussed above, Torrent Power is the distribution licencee in the Ahmedabad/Gandhinagar and Surat areas in Gujarat. It is also the second distribution licencee in the Dahej Special Economic Zone (SEZ) area, since 2010. It is the distribution franchisee in the Bhiwandi area in Maharashtra since January 2007. This is considered as the first case of PPP in the power distribution sector. In Agra too, Torrent Power is the distribution franchisee since April 2010, managing a licensed area of around 220 sqkm. In Bhiwandi, AT&C losses now stand at 14.90 per cent (FY19) as against a whopping 58 per cent at the time of taking over the mandate. In Agra too, such losses have dropped to 16.11 per cent from 58.77 per cent, by the same comparison.
(Featured photograph shows night view of Surat city)
