Govt asks NTPC, PowerGrid to help ailing state power retailers

New Delhi: With a view to taking control of electricity distribution from financially troubled state retailers in certain areas, the government has asked National Thermal Power Corporation (NTPC), its biggest state power producer, and Power Grid Corp, its largest transmission company, to form a joint venture to resolve the matter, sources said. The government’s proposed joint venture would see them take over distribution challenges in areas where retailers are facing issues of power theft and other difficulties.

Step aimed at reviving discoms

The joint venture would be expected to levy a fee on discoms for services that would include the sourcing of cheaper power, improvements in billing and collections, and prevention of power theft. India’s power ministry and the companies have not made any comments on the matter. The government’s main focus is to breathe life into the country’s financially troubled discoms and expand access to electricity, especially in rural areas, where low power usage makes distribution a loss-making business.

Retailers delay payments on don’t buy enough power

While creating financial stress for generators and lenders, the cash-strapped state utilities also delay payments for electricity purchases frequently or don’t purchase sufficient power required to service their customers. If state governments are unwilling to give up control of local distribution, a national distribution company is likely to deal with challenges. Regional authorities many times call for discoms to sell power below cost to gain political mileage.