NEW DELHI: The Union government plans to set up a national power distribution company that will handhold state discoms in electricity distribution activities and ensure time-bound implementation of central schemes. The proposed company will compete with private firms and contractors to bag contracts of state-run distribution companies for appointing franchisees or engineering tenders, officials said. 

Apart from small distribution consultancy wings in Rural Electrification Corporation, Power Grid Corporation and NTPC, the central government has no presence in electricity distribution sector. 

“The Union government has presence in all the power sector segments, be it financing, generation or transmission, but power distribution has always been out of focus and a laggard in the entire system,” said a senior government official, speaking on condition of anonymity. 

“There has been demand from sections of society to have a national level distribution corporation that may work in joint ventures with state governments for implementation of various power distribution activities. The proposal is at a drawing board stage,” he said. 

Girishkumar Kadam, sector head-corporate ratings at ICRA Ltd said, “Such an entity could also benefit the discoms in cost competitive power procurement as nodal agency through bidding route with backto-back power supply agreements with the interested discoms.” 

The proposed company may or may not obtain a distribution licence, said another government official, adding it will not interfere in the working of state power distribution companies given the federal structure. 

“But the utility will ensure implementation of central schemes for power sector in a time-bound manner. It has been widely felt that there is a need for handholding and guiding state distribution companies, and a national distribution corporation may fill the gap,” he said. 

Experts said this would be a smart move, particularly for fulfilling the Narendra Modigovernment’s “power for all” promise ahead of the 2019 general election. 

The government proposes to electrify all households and provide reliable electricity supply by March next year. The draft Electricity Act, likely to be circulated for comments this week, provides for separation of distribution infrastructure ownership from power supply licences and also penalties on discoms for gratuitous load-shedding. India has also been trying to achieve smart metering and smart grid network.