Varanasi Power Distribution Franchisee Model, 2015

M a r k e t I n t e l l i g e n c e . C o n s u l t i n g

Varanasi Power Distribution Franchise Model , 2015

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I n d u s t r y B r i e f

Power Distribution Franchise (DF) is a public-private partnership in the power distribution sector and it works as an

intermediary between distribution utility and the end consumers. The concept of franchise model in electricity distribution

was introduced to reduce the financial losses incurred by state discom due to huge Aggregate Technical & Commercial

(AT&C) losses. Distribution Franchise model has been implemented in various Indian cities for supplying electricity to the

consumers, and was able to bring down the AT&C losses by more than 20% during its period of operation. Over the years,

government of India has continuously been voicing intentions of implementing distribution franchise model in 200 cities

based on the success of distribution franchisees in the cities of Maharashtra, Uttar Pradesh and Odisha. In Varanasi, AT&C

losses were over 30% in 2014, resulting in inadequate power supply, thereby calling for the implementation of distribution

franchise model in the district.

According to TechSci Research report “Varanasi Power Distribution Franchise Model, 2015”, Varanasi district faced

huge distribution losses of over 20% in 2014, which led to financial distress of the Poorvanchal Vidyut Vitaran Nigam

Limited (Varanasi discom). The report underlines that AT&C losses in Varanasi district occur due to electricity theft, low

metering efficiency, improper meter reading, faulty meters, inefficient billing and low collection efficiency. The report also

reveals that Input and Investment based Franchise Model is the most prominent franchise model for distribution of

electricity in India. Under this model, the franchisee is responsible for supply of power, metering, billing and collection of

revenues as well as for up gradation and expansion of distribution infrastructure. Currently, prominent companies that are

operating as power distribution franchisees in the country are Torrent Power, SPML Infra, Essel Utilities, Feedback Energy

Distribution Company and CESC Limited. “Varanasi Power Distribution Franchise Model, 2015” discusses the following

aspects related to Power Distribution Franchise Market in Varanasi District:

• Varanasi District Power Sector Outlook

• Analysis of parameters like AT&C Losses, Consumer Load data, Energy Sales data, etc.

• Policy & Regulatory Landscape

• Changing Market Trends & Emerging Opportunities

• Competitive Landscape & Strategic Recommendations

R e s e a r c h M e t h o d o l o g y

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Baseline Methodology :

For the study, TechSci Research gathered information through both primary and secondary research surveys with

Poorvanchal Vidyut Vitaran Nigam Limited (Varanasi Discom) and other reliable secondary sources. We also put

through exhaustive search of credible paid databases such as Business Week, Factiva, Hoovers, etc. including our

internal database. Our team of analysts has then prudently evaluated all the collected information and presented

the same in chronological order to depict a meaningful and clear picture of the Power scenario in Varanasi district

and different distribution franchisee models.

While compiling the data, we have also cross checked all the collected information from multiple sources and data

warehouses, so as to present the most accurate and precise information of the concerned industry.

Sources :

Central Electricity Authority of India, Poorvanchal Vidyut Vitaran Nigam Limited, Uttar Pradesh Power Corporation

Limited, Power Finance Corporation Limited, World Bank, etc.

Companies InterviewedPuVVNL, SPML Infra Ltd., CESC, Torrent Power, CESC Ltd, Tata PowerCorporation Ltd., Spanco Ltd., Essel Utilities Distribution Company Limited

T a b l e o f C o n t e n t s

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1. Research Methodology

2. Analyst View

3. Product Overview

4. India Power Sector Outlook

4.1. Installed Capacity

4.1.1. By Source (Thermal, Hydro, Renewable, Nuclear)

4.1.2. By Sector (Private, State, Central)

4.1.3. By Fuel (Coal, Hydro, Gas, Wind, Others)

4.2. Regional Snapshot

4.2.1. Power Supply Position

4.2.2. Peak Demand

4.2.3. AT&C Losses

4.3. Institutional Framework

5. Uttar Pradesh Power Sector Outlook

5.1. Installed Capacity

5.1.1. By Source (Thermal, Hydro, Renewable, Nuclear)

5.1.2. By Sector (Private, State, Central)

5.2. Distribution Companies Energy Outlook

5.2.1. By Input Energy

5.2.2. By Energy Sold

5.2.3. Distribution Losses

5.2.4. AT&C Losses


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5.3. Electricity Share

5.3.1. By End User Segment

5.4. Revenue Assessment Share

5.4.1. By End User Segment

6. Purvanchal Vidyut Vitaran Nigam Limited Outlook

6.1. Market Size

6.1.1. By Consumer

6.1.2. By Connected Load

6.1.3. By Power Purchase

6.1.4. By Power Sold

6.1.5. By Distribution Losses

6.1.6. By AT&C Losses

7. Distribution Franchisee Models

7.1. By Type

7.2. Bidding Overview

7.2.1. Power Distribution Franchisee Selection Process

7.2.2. Formats for Bid Submission

7.2.3. Financial Capability

7.2.4. Pre-Qualification Criteria

8. Varanasi District Power Sector Overview

9. Varanasi District Power Sector Outlook

9.1. Power Consumption


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9.1.1. By Consumer

9.2. By Division (Electricity Portfolio)

9.3. Market Size & Forecast

9.3.1. Number of Consumer

9.3.2. Connected Load

9.3.3. Energy Input & Sold

9.3.4. Distribution Losses

9.3.5. Collection Efficiency

9.3.6. AT&C Losses

10. Market Dynamics

10.1. Drivers

10.2. Challenges

11. Market Trends and Developments

11.1. Privatization of Distribution Sector

11.2. Improve Financial Status of Discom

11.3. Entry of New Players

11.4. Input Based Franchisee with Incremental Revenue Share Model

11.5. Government Support

12. Policy & Regulatory Landscape

13. India Economic Profile

14. Competitive Landscape

14.1. Company Profiles


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14.1.1. Torrent Power Limited

14.1.2. Essel Utilities Distribution Company Limited

14.1.3. SPML Infra Limited

14.1.4. Feedback Energy Distribution Company Limited

14.1.5. CESC Limited

14.1.6. Tata Power Corporation Limited

14.1.7. Crompton Greaves Limited

14.1.8. Spanco Limited

14.1.9. Shyam Indus Power Solutions Private Limited

14.1.10. Enzen Global Solutions Private Limited

15. Strategic Recommendations

16. About Us & Disclaimer

S a m p l e d a t a - S n a p s h o t

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PuVVNL Total Metered and Unmetered Consumers,

2010-2014 (Lakhs)

10.00

20.00

30.00

40.00

50.00

15.00

30.00

45.00

60.00

75.00

2010 2011 2012 2013 2014

No. of Consumers No. of Unmetered Connections

10.00

20.00

30.00

40.00

50.00

2010 2011 2012 2013 2014

PuVVNL Connected Load (MW), 2010-2014

10

20

30

40

50

15

30

45

60

75

2010 2011 2012 2013 2014

PowerPurchased(Mkwh)

Power Sold(Mkwh)

PuVVNL Power Purchased and Power Sold

(Million KWh), 2010-2014

Promoter ,

25.00%

Non

Institutions,

25.00%

Domestic

Investment

Institutions, 25.00%

Foreign Investment

Institutions, 25.00%

10.00

20.00

30.00

40.00

50.00

2010 2011 2012 2013 2014

Revenues, 2010 - 2014 (INR Crore) Shareholding Pattern, March 2015

10

20

30

40

50

2010 2011 2012 2013 2014

10.00

20.00

30.00

40.00

50.00

2010 2011 2012 2013 2014

Debt-Equity Ratio , 2010 – 2014 EBITDA , 2010 - 2014 (INR Crore)

Torrent Power Ltd., Financial Analysis, 2010-2014

10

20

30

9

18

27

8

16

24

7

14

21

2011 2012 2013

ACS Avg. Revenue (without subsidy) Gap w/o Subsidy Gap with Subsidy

PuVVNL ACS, Avg. Revenue, Gap (without subsidy and with

subsidy), 2011-2013 (INR/kwh) 20.00%

20.00%

20.00%

20.00%

20.00%

Coal Hydro Gas Wind Others*

India Total Installed Power Capacity (MW), By Type of Fuel, As of

March 2015

© TechSci Research

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Disclaimer :

The contents of this report are based on information generally available to the public from sources believed to be reliable. No representation ismade that it is timely, accurate or complete. TechSci Research has taken due care and caution in compilation of data as this has been obtained fromvarious sources including which it considers reliable and first hand. However, TechSci Research does not guarantee the accuracy, adequacy orcompleteness of any information and it is not responsible for any errors or omissions or for the results obtained from the use of such informationand especially states that it has no financial liability whatsoever to the subscribers / users of this report. The information herein, together with allestimates and forecasts, can change without notice. All the figures provided in this document are indicative of relative market size and are strictlyfor client’s internal consumption. Usage of the same for purpose other than internal will require prior approval of TechSci Research.

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