New Delhi: In a significant move that heralds a major change in the country’s power distribution sector, two leading public sector utilities, National Thermal Power Corporation Ltd (NTPC) and Power Grid Corporation of India (PGCI), have joined hands to set up a National Electricity Distribution Company.
The proposed joint venture paves way for the leading power generator NTPC and the Power Grid that owns the largest power transmission network of the country to foray into consumer electricity supply business.
The latest move also suggests that there could be a fresh round of power distribution reforms, for instance separating the content and carriage businesses – the infrastructure builder for power supply as well as the supplier to the consumer would be two different companies. Once implemented, the mover is likely to usher in more competition in power distribution business, as there would be more than one supplier. Incidentally, this suggestion was made in the most recent amendments to the Electricity Act, 2003, which the government is yet to table in the Parliament.
A statement issued by the Ministry of Power spokesperson said, “An agreement has been entered between Power Grid & NTPC June 21, 2019 for formation of a JV Company on 50:50 equity basis to set up National Electricity Distribution Company Ltd (NEDCL). The main objective of JVC is to undertake the business for distribution of electricity in distribution circles in various states and Union Territories of India and other related activities.”
The Power Grid also posted this statement on social media.
Incidentally, the announcement comes at a time when several agencies have declared the present reform scheme UDAY as a failed scheme. Launched in 2015, UDAY aimed at turning around the state owned discoms financially and operationally. While the financial part was somewhat achieved with the state governments taking over the losses of discoms and issuing bonds, the operational front is still facing challenges.
Losses incurred by the state-owned discoms increased by over 40 per cent to Rs 21,658 crore at the end of FY19. Simultaneously, the dues of discoms to power gencos stood at Rs 38,023 crore.
