Electricity distribution concessions in Odisha

Abstract

This case study for educational purposes analyses the design of the electricity distribution concessions in Odisha, India, and the current practices that the concessionaire, Tata Power, has implemented to face the challenges of this business. Odisha pioneered distribution licenses in India back in 1999, with the award of four distribution concessions to private companies. All of them failed, ending with the resignation of the concessionaire or termination for poor performance. Starting from 2016, the regulatory authority, taking advantage of the lessons learned in the previous experience, offered new licenses and launched tenders to attract private capital. Tata Power was awarded the four distribution concessions in close succession and, by April 2021, gained control of electricity distribution throughout Odisha, right at the cusp of the COVID 19 pandemic in India. With these concessions, Tata Power broke new ground, and not only in the Indian context: with 40 million new customers, many of them living in poor rural villages spread across the state, the Odisha project is unique in the entire developing world. It could have strategic value beyond short-term monetary considerations, but faces considerable implementation difficulties.