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Current Affairs

NTPC, Power Grid forms National Electricity Distribution Company Limited

Date: 25 June 2019 Tags: Industries, Infrastructure

National Thermal Power Corporation Limited (NTPC) and PowerGrid Corporation of India Limited have signed Memorandum of Agreement (MoU) to set up National Electricity Distribution Company Limited (NEDCL). With this, NTPC, a leading power generator, and Power Grid, which owns India’s largest power transmission network will foray into consumer electricity supply business.

National Electricity Distribution Company Limited (NEDCL)

  • It will be a joint venture (JV) of NTPC and Power Grid on 50:50 equity basis. It will undertake the business for distributing electricity and other related activities in distribution circles of India.
  • It will prove a major gamechanger since NTPC, a leading power generator, and Power Grid, which owns India’s largest power transmission network are entering into consumer electricity supply business.

Signifiacne

Establishment of NEDCL is considered as another step of Central Government in power distribution reforms. This includes separation of content and carriage businesses in power distribution — i.e the infrastructure builder for power supply and supplier to consumers would be two separate companies. This will bring more competition in the power distribution sector with more than one power supplier. These measures have been suggested in the latest amendments to the Electricity Act, 2003, which is yet to be tabled in Parliament.

It is also expected to enhance 3A’s (Availability, Accessibility and Affordability) of the electricity. It will also aid in overhauling the power distribution sector since existing reform scheme UDAY (Ujwal DISCOM Assurance Yojana) could not deliver effectively on its stated objectives.