State run Indian discoms likely to setup National Electricity Distribution Company (NCDC) for discom services

State run National Thermal Power corporation (NTPC) and Power Grid Corp. of India Ltd (PGCIL) are likely to set up National Electricity Distribution Company (NCDC)-a pan India power distribution entity which will be distributing electricity in a 50-50 joint venture, said some officials close to the developments.

The new JV will focus on aggregating electricity demand and rendering it to pubic and after getting operational may even acquire some weak electricity distribution entities. The new NCDC comes at a time when major discoms (distribution companies) are struggling against weak finance owing to losses and borrowings. Now, setting up of a national discom can help resolve the issue of stressed assets in power generation.

Most of the Indian discoms have been grappling with problems like low collection, increase in power purchase cost, inadequate electricity tariff hike, inadequate subsidy disbursement, and increasing government department dues. This along with poor payments by discoms have deteriorated the situation and has also caused stress on the banking system.

The new proposal of setting up an NCDC is as per Energy Efficiency Services Ltd (EESL), which is administered by power ministry. EESL is a energy service company, operated by four government entities- Power Finance Corporation, NTPC Ltd, Rural Electrification Corporation and Power Grid Corp. of India Ltd.

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