What is the idea of Tatra Power buying a stake in NESCO?

The Competition Commission of India or the CCI has approved Tata Power’s purchase of a 51% stake in the North Eastern Electricity Supply Company of Odisha, also known as NESCO. CCI is the watchdog that ensures that any mergers or acquisitions do not result in monopolies to the detriment of the customer.

The utility NESCO was formerly owned by Grid Corporation of Odisha, also known as GRIDCO. Tata Power has purchased NESCO from GRIDCO. The buyout was done through a competitive bidding process that was initiated by the Odisha Electricity Regulatory Commission or the OERC. This enables Tata Power to expand its footprint in the power generation and distribution franchises substantially.

NESCO has been around for over 20 years in operation and is responsible for the distribution of in five districts of Odisha, which include Balasore, Bhadrak, Jajpur, Keonjhar and Baripada. Under the ownership agreement signed by the two parties, Tata Power will now own 51% equity combined with management control in NESCO while the original owner, GRIDCO, will hold the remaining 49% stake in the company.

This acquisition deal enables Tata Power to serve the entire population of Odisha with close to 90 lakh customers. This expansion will enhance Tata Power’s overall consumer base to nearly 1.20 crore customers spread across Mumbai, New Delhi, Ajmer as well as the Central, Southern and Western parts of the state of Odisha. CCI approval is significant to any deal as it is normally the final clearance before the deal can actually go through.