Odisha Govt initiates process to sell off CESU

Bizodsha Bureau, Bhubaneswar, May 24, 2015 :

Almost one and half decade after US power utility major, AES withdrew from managing the Central Electricity Supply Utility of Odisha (CESU), Odisha government once again is looking for sale of CESU.

In fact, it has initiated the process for selling off CESU with the Odisha Electricity Regulatory Commission (OERC) 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.

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.

However, the OERC’s fresh move to sell off the Discom faces stiff opposition from the power utility’s employees.