State-run EESL plans to sell its 49% stake in IntelliSmart

State-run Energy Efficiency Services Ltd (EESL) plans to sell its 49% stake in IntelliSmart Infrastructure Pvt. Ltd, its joint venture with National Investment and Infrastructure Fund Ltd (NIIF) for smart metering and digital solutions, two people aware of the development said.

The deal, that may rank among the biggest in India’s energy services space, will start with mandating an investment banker for running the sale process.

IntelliSmart is in the process of replacing 27.6 million of India's 250 million conventional meters with smart meters, in the world’s largest such programme, aimed to reduce power theft and ensure reliable electricity supply. EESL, a joint venture of NTPC Ltd, Power Grid Corp. of India Ltd, Power Finance Corp. and REC Ltd, holds 332.2 million shares in IntelliSmart as per its annual report for FY24, with each share with a face value of ₹10.

“EESL is looking to exit the JV and would appoint an investment banker for the process, ” said one of the two people mentioned above.

Queries emailed to spokespersons of EESL, NIIF and IntelliSmart remained unanswered till press time.

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The deal comes at a time when there aren't many state-run firms in the energy services space while private firms are growing, with major business groups including Tata Power, Adani Group and GMR Group entering the space.

IntelliSmart was formed in 2019 with an aim to finance and operate the smart meter rollout of power distribution companies, with NIIF holding 51% stake and EESL holding 49%. It has presence across Uttar Pradesh, Assam, Gujarat, Bihar. Gujarat, Rajasthan and Haryana, apart from the national capital. By November 2023, it had secured an orderbook of 20 million meters, and in May this year, it completed the implementation of 620,000 meters in Assam under the Revamped Distribution Sector Scheme (RDSS).

IntelliSmart, which has also entered gas metering services, has four subsidiaries, which operate as special purpose vehicles (SPV) in specific states and regions. These are Paschimanchal Infrastructure Pvt Ltd, Assam Smart Metering Pvt. Ltd, Dakshin Gujarat Smart Metering Pvt. Ltd and Madhyanchal One Infrastructure Pvt. Ltd.

In FY24, it reported a net profit of ₹27.06 crore, against a net loss of ₹2.06 crore in FY23. Its revenue from operations increased nearly three-fold to ₹243.52 crore, from ₹84.96 crore during the same period a year earlier.

The plan to exit the joint venture also comes at a time when EESL has been facing financial woes and has dues to recover from states under the National Street Lighting Programme. In FY23, the company reported a net loss of ₹277.77 crore, against the loss of ₹153.32 crore in the previous fiscal.

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Prepaid smart metering is a flagship programme of the Centre to modernize the power distribution space and make it more efficient and ensure timely payment both by government departments, commercial properties and households. It would be key to implement the time of day tariff in the country, which means varying tariffs for electricity for different times during the day. Under the amendments made to the electricity rules last year, power tariffs could be reduced by up to 20% during the day and increase by up to 20% during peak night hours. Known as the Time of Day (ToD) Tariff system, consumers will be charged varying rates for electricity based on the time of day.

According to the Union power ministry's National Smart Grid Mission website, 222.4 million out of the targeted 250 million smart meters have been sanctioned, and 16.4 million meters have been installed so far.