JVVNL invites proposals for franchising of distribution in Kota

The Indian power sector is plagued with huge losses to the tune of 25.38%(CEA report Jan’15) of which distribution sector is its weakest link accounting for a majority of the losses. The government in its efforts to curb this menace had turned to franchising of distribution utilities as a part of its R-APDRP(Restructured Accelerated Power Development and Reforms Programme ) which was launched on July 2008 aimed at reduction of AT&C losses upto 15% level through strengthening & up-gradation of Sub Transmission and Distribution network .

JVVNL (Jaipur Vidyut Vitran Nigam Limited), one of the five entities of the restructured erstwhile Rajasthan State Electricity Board (RSEB) in its endeavor to improve operational efficiency of the distribution system and quality of service to the consumers, intends to appoint an Input Based Distribution Franchisee to be selected through bidding. An input based distribution franchisee is that type of a franchisee model in which the distribution franchisee buys electricity from the utilities at a pre-determined rate.

The city of Kota, third largest in Rajasthan after Jaipur and Jodhpur having population of over 10 lac has been selected as the franchisee area.

Losses and Average Billing and Revenue Realization for Kota City Considered for Distribution franchisee.

1_losses

 

JVVNL has thus requested for proposals for appointment of distribution franchisee for the city of Kota for tenure of 15 years. A pre-bid meeting was held on 20/06/2015 at Vidyut Bhavan for discussion of related matters.

The franchisee shall be required to make a minimum a capital expenditure of Rs. 210 Cr over the initial period of five years in the franchisee area. This capital expenditure shall be made inter alia for the following:

2_capex

The franchisee shall be responsible for the following in the franchisee area:

  • To undertake all the liabilities and obligations of the distribution licensee;
  • Discharge all the duties and responsibilities on behalf of JVVNL as per the terms and conditions of the License given by RERC;
  • Undertake the distribution and supply of power to the consumers of JVVNL in the Franchisee Area;
  • Undertake all Operations and Maintenance related activities in the Franchisee Area;
  • Maintain the existing distribution network including replacing failed distribution transformers and defective meters within a given time frame.
  • Undertaking reading of meters, generation of the bills, distribution of the same and payment collection from the consumers in the Franchisee Area;
  • Carrying out periodical demand estimation / load forecasting and apprising JVVNL of the same ;
  • Upgrading, renovating and maintaining the existing distribution network/ systems/ assets as per Prudent Utility Practices and the standards that may be prescribed by RERC;

In addition to this the franchisee has the right to initiate action to prevent theft of power, interference with meters and extinguishing public lamps, theft of electric lines and material etc. Also the franchisee may enter into a tripartite agreement with the JVVNL and the Generator and pay transmission charges to RVPNL (Rajasthan Rajya Vidyut Prasaran Nigam Limited) , in the case of power being brought into the Franchisee Area  from sources other than JVVNL .

The bidding process shall include mainly of the following stages commencing from the date of issue of RfP document.

3_process

The bidders are required to submit Technical and Financial Proposals in response to the RFP document  which would be evaluated for selection.

 

The bidder should satisfy the following prequalification criteria for the purpose of technical evaluation:

  • The bidder should be a public limited company meeting the Code of Conduct for grant of Distribution Business License.
  • Should have a net worth of Rs210 Cr as per the Audited Annual Accounts of the FY 2013-14.
  • Must have Average Internal Resource Generation of Rs 105 Cr
  • Also the bidder should have a experience of handling at least 33000 electricity consumers continuously for last three years.

The financial proposals of only those bidders satisfying the technical criteria shall then be evaluated.

The Bidders are required to quote an annualized Input Rate for the power to be injected by JVVNL not below a minimum benchmark input rate as specified for the entire term of 15 years.

4_input rate

The financial proposals of the technically qualified bidders would be evaluated by comparing the present value of the revenue derived on the basis of the annualized Input Rate for entire term of the agreement, computed at a 13.10% (discount rate to be used for bid evaluation as per CERC notification dated 7 October 2013) and the estimated energy input .

The bidders shall then be shortlisted based on the maximum offered present value for the power to be injected by JVVNL in the franchisee area.

Assuming discounting rate as 10%, the present value shall be calculated as:

5_pV 6_pv

Thus by employing this type of a PPP model, the state is hopeful to reduce its losses and hence get a better revenue from the power being sold.

For futher info: read http://jaipurdiscom.com/tender/ppp/2015/Kota_RfP.pdf

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