CESC clarifies stand on demerged entities in response to WBERC letter

RP Sanjiv Goenka group flagship company CESC Ltd has responded to the West Bengal Electricity Regulatory Commission (WBERC), clarifying that its recently demerged entities have not received any "benefit" from the parent company. The WBERC had in November last year asked CESC to submit an affidavit with the commission in this regard. "CESC has responded to the WBERC letter... The company in its response said that the demerged entities have not taken any benefit from its parent," industry sources told PTI.

The commission will evaluate the power utility's response, and if required, could conduct an independent audit to verify its claims, they said. According to the demerger scheme, the non-power businesses and its subsidiaries have been transferred to two new entities - RP-SG Retail Ltd and RP-SG Business Process Services Ltd. CESC will retain only the power business. The company had gone ahead with a partial demerger, following a nod from the Kolkata bench of the National Company Law Tribunal (NCLT), after the commission disapproved a power purchase agreement (PPA) for the proposed generation and distribution companies.

WBERC chairman R N Sen, who retired in November 2018, had said that if the separated entities had benefited from CESC, there would be a need for a valuation exercise in the interest of consumers. Sen had also said that the NCLT nod does not qualify for "automatic approval" from the WBERC. The commission is yet to get a new chairman.

(With inputs from agencies.)