Essel Vidyut Vitaran (Gwalior) Private Limited

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On 10th May 2012, Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (MPMKVVCL) and Essel Group consortium (Smart Wireless Private Limited as Lead member, and Pan India Network Limited, Pan India Infrastructures Private Limited - all Essel Group Companies)signed a Distribution Franchisee Agreement for Gwalior city in the state of Madhya Pradesh(MP). Essel Group would distribute power in Gwalior city for the next 15 years. In this area, the Company would distribute power as an agent of the present distribution licensee - Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Limited (MPMKVVCL). There were about 1,050,000 people (202,000 registered power consumers among these) in the city spread over 174 sq. kms. with an estimated demand of about 298MW with annual power consumption of about 1031.3 MUs. Essel group consortium established Essel Vidyut Vitaran (Gwalior) Private Limited (EVVGPL), a special purpose vehicle, to execute this distribution franchise. The primary obligation of the Distribution Franchise (EVVGPL) included - (a) undertaking the distribution and supply of power to the consumers of MPPKVVCL in the designated Distribution Franchise Area, (b) undertaking reading of meters, generating of bills, payment collection, as per the retail tariff structure deterined by MPERC (State Power Regulator), (c) maintaining the existing distribution network and replacing failed distribution transformers and defective meters and other network infrastructure assets, (d) making payments to MPMKVVCL, (e) collection of MPMKVVCL's outstandinf arreats as their agent and remittance of the same. The Essel Group consortium was selected through a competitive bidding process undertaken by MPMKVVCL on 23rd March 2012. The bid variable was the highest price at which power was purchased from MPPKVVCL (Discom) for subsequent distribution in the franchise area. 9 companies including - Spanco, Monte Carlo, Dainik Bhaskar Power, A2Z, PNC Infratech, CESC,DPSCL,Torrent Power had submitted bids out of which all qualified. Essel won the bid by quoting the highest purchase price - Levelized Input Rate (LIP) of INR 4.140 per unit. Minimum LIP was Rs. 2.52/unit among all quoted LIPs. The 2nd ranker in the bid quoted INR 3.870/Unit. Average LIP of all quoted bids was INR 3.23/unit. At the end of FY 2010-11, AT&C losses, (which included line loses, theft as well as non-billing) were to the tune of 47.43%. As per the DF agreement, EVVGPL needed to bring down power losses to 15 % by the end of FY2013-14. EVVGPL would purchase power from the MPMKVVCL and would distribute it to consumers on the rates approved by the MP Electricity Regulatory Commission. Franchisee would remit a pre-determined share of the revenue collection at regular intervals to the Licensee, as per the Distribution Franchisee Agreement. EVVGPL was mandated to invest USD 29mn (INR 1700mn @58.6 INR/USD) in Gwalior for infrastructure upgrade to reduce T&D losses and improve collections. EVVSPL had projected to improve the collection efficiency from 93.95% at present to 99.50% by the end of FY2013-14. There was no news regarding financial closure in public domain at the time of collection of this information. MPMKVVCL was yet to hand over the distribution assets to EVVGPL at the time of collection of this information.

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