DVB TO RATE
BIDDERS ON EFFICIENCY SCORE
The Delhi government has come out with a novel scheme for divesting 51 per cent
stake in all its three power distribution companies, where the player
guaranteeing maximum improvement in efficiency will get to operate the
distribution entities.
Six players- AES, China Light and Power, BSES, Reliance Power CESCON and Tata
Power-have been short listed for the bidding process in the three distribution
companies, with each company comprising two of the six distribution circles in
the city. The short listed companies were handed out request for proposals
(RFPs) today.
The Delhi Vidyut Board's (DVB) privatisation move is unique because of several
new features incorporated in it.
The new features are:
" All the bids will be evaluated on the basis of an efficiency improvement
criterion;
" The stakes in the DVB distribution companies are to be sold at
part and a business valuation model has been adopted;
" The benefit of any
incremental gain in efficiency will be shared between the distribution company
and the consumer.
" The retail tariff will remain unchanged for five years
and there will be no difference in tariffs charged by the three distribution
companies for the first three years;
" Only the distribution entities will
be privatized while the generation and transmission entities will continue to
remain under DVB control;
" The scope of transmission and distribution
losses have been expanded to include recovery losses.
The government has set itself a target of handing over the management of the
distribution companies to the successful bidders by February 28,2002. A maximum
of two distribution companies will be transferred to the successful bidder. The
use the efficiency improvement criterion is an alternative to the five-year
tariff setting principle proposed by DVB earlier, which was short down by the
Delhi Electricity Regulatory Commission (DERC).
New Initiatives in the DVB sale model
" Bids to be evaluated on basis of efficiency improvement criterion
"
Business valuation model adopted, selling stake at par
" Aggregate technical
and commercial losses considered, instead of T&D losses
" Higher efficiency
gains to be shared between the distribution companies and consumers
" Retail
tariffs constant for five years
(Courtesy Business Standard )
