North Delhi Power Limited

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On July 1, 2002, Tata Power Company (TPC) acquired 51 percent stake in North Northwest Delhi Electricity Distribution Company Limited and took over its management and operation from the Government of National Capitol Territory in Delhi (NCT). The distribution company was renamed North Delhi Power Limited (NDPL) after the take over. NDPL’s service area included north and northwest regions of Delhi and was responsible for all power distribution activities - supplying electricity, metering, billing, and controlling transmission and commercial losses and power thefts. The partial divestiture of NDPL was part of a major restructuring effort undertaken by NCT to privatize the distribution portion of Delhi Vidyut Board (DVB), a vertically integrated state owned power enterprise. DVB was functionally unbundled into six companies in 2001 – a generation company, a transmission company a holding company and three distribution companies. North Delhi Power Limited was one of three companies to which the distribution assets of DVB were transferred. The other two companies were BSES Yamuna Power Limited and BSES Rajdhani Power Limited. TPC acquired 51 percent stake in NDPL for Rs 18,700 lakhs (US$ 39 million) and the remaining 49% was held by Delhi Power Company Limited (DPCL), a holding company fully owned by NCT. Tata Power won the tender by committing to reduce aggregate technical and commercial loss by 17 percent in the first five years of the take over. TPC invested Rs 350 crore (US$ 73 million) in the first five years to upgrade the distribution systems in its region. Reliance Energy Limited (formerly Bombay Suburban Electric Supply Company or BSES) bought 51 percent stake in each of the other two distribution companies. Delhi Electricity Regulatory Commission, regulator of Delhi’s power industry, was responsible for setting tariffs for electricity, licensing new capacity, and prescribing performance standards. There was a uniform retail tariff all over Delhi for the first five years of the privatization but the bulk supply tariff for each distribution company was based on its paying capacity. To avoid sudden increase in retail tariffs, the Delhi government (NCT) also committed up to Rs 345,000 lakhs (USD $ 720 million) for the first five years in the form of discounted price for the bulk power that the three distribution companies purchased from the state owned transmission company but no specific amount of money was targeted for each distribution company. NCT also committed to a 16% return on the invested capital of the private distribution companies.