Monday, September 26, 2022

A major joint venture run by power PSUs could be on the anvil

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New Delhi: With the government chasing a divestment target of Rs 90,000 this fiscal, mergers, acquisitions and joint ventures are on the anvil. And word has it that state-run National Thermal Power Corporation and PowerGrid Corporation of India Ltd (PGCIL) may soon come together to set up a pan-India power distribution firm in an equal joint venture — National Electricity Distribution Company (NCDC), sources said.

What role will NCDC play?

The mandate of the new public sector undertaking (PSU) is expected to be to aggregate power demand in the country and cater to it. It could also be responsible for taking over weak electricity distribution entities. According to sources, PSU employees from other state-owned enterprises will be put on the job at NCDC. The move is being planned at a time when state-owned distribution companies are undergoing a tough time financially due to loans and borrowings. The financial crisis facing discoms has not just impacted power generation companies but has also swelled up the non-performing assets in the banking sector.

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The JV will not require a Cabinet approval

The joint venture, which is being planned on the lines of Energy Efficiency Services Ltd (EESL) under the Ministry of Power, will not require approval from the Cabinet. It will be operated by four state-run firms — NTPC, Power Finance Corporation, Rural Electrification Corporation and PGCIL. The current dispensation has been working to separate the carriage from the content operations of discoms — where carriage refers to the distribution aspect and content refers to electricity. Simply put, these are called ‘wire’ and ‘supply.’ Separating the two will allow customers in India to buy electricity from a power company of their choice and have it supplied to them by the distribution company that caters to their neighbourhood.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Telegram. Join PSU Watch Channel in your Telegram and stay updated)

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