(LiveMint)
In what may be a game changer for India’s beleaguered electricity distribution sector, the National Democratic Alliance (NDA) government is considering setting up a pan-India power distribution company, said two people aware of the development. The idea to set up a National Electricity Distribution Company is being explored, given that the segment will be key to the long-term fortunes of the power sector. Distribution companies have so far been the weakest link in the electricity value chain. Poor payment records of state-owned electricity distribution companies (discoms) 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. In such a situation, a national electricity distribution company can procure electricity at competitive rates and help address the issue of stressed assets in power generation. The NPAs account for around 5.9% of the banking sector’s total outstanding advances of Rs 4.73 trillion, according to the Economic Survey 2016-17 released in August.
