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National Electricity Distribution Company

Posted on : 25 Dec 2019

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  • A National Electricity Distribution Company Ltd. (NEDCL) was recently set up as a joint venture (50:50) between NTPC and PowerGrid Corporation of India Ltd (PGCIL) and will enter the electricity distribution business on a pan-India basis.
  • But, it will not become a distribution utility (DISCOM) like Tamil Nadu Generation & Distribution Corporation Ltd or Bangalore Electricity Supply Company Ltd. Instead this joint venture will have a character similar to other such ventures such as Energy Efficiency Services Ltd and Petronet LNG that operate as profit-focused entities.
  • The joint venture would be a contractor that helps improve the performance of existing DISCOMs. This business model is similar to that of Feedback Energy Distribution Company that is on the lines of a distribution system operator.
  • Distribution is the most important link in the entire power sector value chain.  As the only interface between utilities and consumers, it is the cash register for the entire sector. Under the Indian Constitution, power is a Concurrent subject and the responsibility for distribution and supply of power to rural and urban consumers rests with the states.
  • Distribution companies (DISCOMS) have so far been the weakest link in the electricity value chain. Poor payment records of state-owned electricity distribution companies have not only adversely affected power generation companies, but has contributed in causing stress in the banking sector as well.
  • Rising non-performing assets (NPAs) in the power sector has been a major concern. The problem only multiplies with the states refusing to ink new power purchase agreements (PPAs), as they are not willing to buy more electricity.


Article Related Questions

  1. With reference to power sector in India, consider the following statements
    1.National Electricity Distribution Company Ltd. (NEDCL) is a distribution utility on a pan-India basis.
    2.NEDCL is a joint venture between NTPC and PowerGrid Corporation of India Ltd (PGCIL).
    3.Power is a state subject under the Indian constitution.
    Which of the above statements is/are correct?

  2. 1.1 and 2 only

    2.2 only

    3.1 and 3 only

    4.1, 2 and 3

    Right Ans : 2 only

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