NTPC-PGCIL joint venture to focus on improving efficiency of distribution utilities

Twesh MishraNew Delhi, June 26 New Delhi | Updated on June 26, 2019 Published on June 26, 2019

The expansion in power generation sector stood at 7.4 per cent compared to 4.2 per cent in the year-ago month   -  THE HINDU

National Electricity Distribution Company Ltd (NEDCL) — the newly- formed 50:50 joint venture between NTPC and PowerGrid Corporation of India Ltd (PGCIL) — will enter the electricity distribution business on a pan-India basis.

But, it will not become a distribution utility (DISCOM) like Tamil Nadu Generation & Distribution Corporation Ltd or Bangalore Electricity Supply Company Ltd. Instead this joint venture will have a character similar to other such ventures such as Energy Efficiency Services Ltd and Petronet LNG that operate as profit-focussed entities, according to officials in the know.

Officials in the Power Ministry told BusinessLine that the joint venture would be a contractor that helps improve the performance of existing DISCOMs. This business model is similar to that of Feedback Energy Distribution Company that is on the lines of a distribution system operator.

“NTPC and PGCIL have been individually taking up these projects. Future projects will be undertaken by this joint venture and existing projects are also expected to be hived into this company,” an official aware of the developments said.

Both NTPC and PGCIL have been tight lipped about the role this joint venture is going to play in the country’s power sector. “The final decision on the vision of this joint venture will be vetted by the NITI Aayog and the Department of Investment and Public Asset Management (DIPAM),” another official said.

Role of DSO

Commenting on the role that distribution system operators play and the services that are offered to DISCOMs, Devtosh Chaturvedi, Managing Director of Feedback Energy Distribution Company, said, “We go to a DISCOM and talk about an area which is a rural urban combine. There is no longer cherry picking of urban areas as far as private sector participation is concerned…We have felt that a rural-urban combine integrates both the private sector requirement and what the DISCOM needs from the private sector which is accountability, loss reduction, reducing the gap of ACS-ARR (the gap between Average Cost of Supply and Average Revenue Realised) per unit.”

“Any agency that comes into the sector will have to recognise this reality. Once it’s done, thereafter the focus is on transforming the consumer service perspective through technology and investment,” he added.

Published on June 26, 2019
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