At least eight investors, including Caisse de dépôt et placement du Québec (CDPQ), Actis LLP and Brookfield Asset Management, have showed initial interest in buying Reliance Infrastructure Ltd’s Delhi electricity distribution businesses, said three people aware of the development.

The other investors are Greenko Energy Holdings, Enel Group, I Squared Capital, Torrent Power and Wade Capital Group LLC, the people said on condition of anonymity.

Reliance Infrastructure has hired KPMG to find buyers for its 51% stake each in BSES Rajdhani Power Ltd (BRPL) and BSES Yamuna Power Ltd (BYPL), the people said on condition of anonymity.

The two power distribution businesses cater to around 4.4 million customers in the national capital. Reliance Infrastructure’s plan to sell the businesses follows the sale of its Mumbai city power distribution business to Adani Transmission Ltd for Rs18,800 crore in August 2018. Reliance Infrastructure is part of the Anil Dhirubhai Ambani Group, which is trying to sell assets to pare down debt.

While a Reliance Infrastructure Ltd spokesperson did not respond to Mint’s queries emailed on Friday evening, a KPMG spokesperson declined to “comment on any company-specific matters.”

While announcing the March quarter earnings on 8 May, Reliance Infrastructure said it “aims to be zero debt in the next financial year based on liquidity events.”

Queries emailed to CDPQ, Actis Llp, Brookfield, Greenko Energy Holdings, I Squared Capital and Torrent Power remained unanswered. An Enel Group spokesperson declined to comment. Wade Capital Group couldn’t be immediately reached.

Three of Delhi discoms were privatized in July 2002: BRPL, BYPL and Tata Power Delhi Distribution Ltd. The distribution firms are joint ventures with Delhi Power Co. Ltd, which owns a 49% stake in each of them. The other discoms in Delhi are Military Engineering Services (for Delhi Cantonment) and the New Delhi Municipal Corporation.

“While the accumulated regulatory assets over the years are a challenge, we are analysing them as these are attractive circles,” said a top executive of one of the eight companies cited above.

A regulatory asset is created when the power regulator accepts certain expenditures but does not factor them in while setting tariff. These expenditures are to be adjusted in future tariff changes and, in the interim, are accounted for as regulatory assets. India’s regulatory assets have ballooned to Rs1.5 trillion.

Delhi registered the lowest aggregate technical and commercial loss of 9.7% in the country, where the average loss is 21.4%, the highest in the world.

The national capital’s electricity demand touched an all-time high of 7,409 MW in July last year.

India’s power demand touched a record of 176.724 gigawatts (GW) on 26 April last year but has since plummeted because of the nationwide lockdown that came into effect from 25 March. While peak demand has come down with commercial and industrial power demand taking a hit during the lockdown, household consumption, which accounts for around a quarter of India’s power demand, has gone up. While some economic activities have now been allowed in coronavirus-free zones, electricity demand hasn’t picked up.

News Source: Livemint


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