Crompton franchisee contract terminated

State-run power distributor MSEDCL has terminated the contract of distribution franchisee for Mahal, Civil Lines and Gandhibagh
divisions-- Crompton Greaves-- for not taking over the divisions even after passage of over one year. MSEDCL managing director Ajoy Mehta told TOI that Crompton was delaying the take over on one pretext or another.

"They were making a lot of excuses. We gave them more than enough time. Finally, we had to take the decision," he said. Mehta said that while MSEDCL had not taken any decision regarding the three city divisions, the company had not scrapped its distribution franchisee policy. "The high loss divisions will be franchised out. The Crompton issue won't affect our policy," he added.

Other than Mahal, Gandhibagh and Civil Lines divisions, MSEDCL had plans to franchise twelve more divisions including Kalyan, Aurangabad and Jalgaon. Presently, two divisions of MSEDCL in Bhiwandi are being run by a franchisee.

MSEDCL had a rough ride for the three divisions right from the beginning. It had floated the tender in April 2007 but then changed several tender conditions in June 2007 after a pre-bid meeting and floated a fresh tender. Crompton Greaves bagged the tender by offering Rs 2,600 crore revenue in 15 years against MSEDCL's benchmark of Rs 1,800 crore. The change in tender conditions was challenged by Citizens' Forum and Anil Wadpalliwar in high court here. The petitioners were basically opposed to appointment of a franchisee in Nagpur.

MSEDCL signed an agreement with Crompton in October 2007 during the pendency of the petition. The company was supposed to take over from December 2007. However, the high court ordered a status quo in November and disposed of the petition in February 2008 referring the case to Maharashtra Electricity Regulatory Commission (MERC).

MERC gave a green signal to MSEDCL on all counts in May 2008. MSEDCL then asked Crompton to take over from June. However, the company sought a month's extension, which was granted by MSEDCL. The contract ran into trouble during the joint audit. Crompton had calculated MSEDCL's revenue from the three divisions inclusive of electricity duty, which is paid to state government. On realizing its blunder, it sought financial relaxation from MSEDCL, which was not granted. Crompton will lose its Rs 25 lakh earnest money deposit (EMD) but it is not clear whether MSEDCL will claim any damages from it for the losses suffered due to delay.