Union government proposes to build a National Discom consulting the state discoms

In recent news, the Union Government has planned to set up a national power distribution company that will have a grip on the state discoms in electricity distribution activities and ensure timely implementation of central schemes.

The proposed company is said to compete with the private firms and contractors to bag contracts for appointing franchises or engineer tenders. Currently, there is no national-level distribution company, only small level distribution consultancy wings like Rural Electrification Corporation (REC), Power Grid Corporation and NTPC. The new company will act as a consultancy firm without acquiring a distribution license. This announcements also gives support to the Prime Minister’s wish to of giving power to all till the 2019 elections.

Similar to the National Tariff Policy (NTP) 2016 amendments, the draft Electricity Act is also in the process of being circulated for comments. The proposed amendments suggest separation of distribution infrastructure ownership from power supply licenses and also penalties in income for unexpected load shedding.

According to Deutsche Bank Market Research report, the annual losses of discoms have reduced by 70% to approximately INR 17,350 crore in the past two years.

We feel that with various amendments being proposed in the policies if the implementation is carried out strategically, the state of country’s electrification will see a new sun in the coming years.

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