NTPC, REC to bid for discoms in Union Territories, according to sources

The Union power ministry has suggested to the two companies that they should participate in the upcoming bidding for privatisation of distribution companies in UTs, they said.

New Delhi: NTPC, the country’s largest power producer, and sectoral financier REC Ltd will enter power distribution ahead of the government's mega privatisation push in the segment.

The two companies will start with putting in bids for privatisation of discoms in Union Territories, said people aware of the matter. The Union power ministry has suggested to the two companies that they should participate in the upcoming bidding for privatisation of distribution companies in UTs, they said.

The ministry has asked the two state-run firms’ wholly owned subsidiaries NTPC Electric Supply Company Ltd (NESCL) and REC Power Distribution Company Ltd (RECPDCL) to initiate measures according to their Articles of Association and Memoranda to consider participating in bids for distribution and supply of electricity of discoms, said the people in the know.


The two subsidiaries have been engaged in consultancy and turnkey projects in the distribution segment and are now ready to take a leap in the business of distribution.

India has decided to privatise electricity distribution companies in all its UTs as a model for emulation by other utilities across the country. The government is also pushing private-public partnerships to bring in efficiency in discoms of states like Uttar Pradesh. This was announced by finance minister Nirmala Sitharaman as part of the Centre’s Rs 2 lakh Atmanirbhar Bharat (self-reliant India) package. The privatisation of discoms in UTs is targeted to be completed as per a very stringent deadline of January 2021.

The government has appointed transaction advisors for privatisation of UTs such as Chandigarh and Dadra and Nagar Haveli, which are likely to be the first ones on the block.
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The Prime Minister's Office has asked the power ministry to “dismantle inefficient and burdensome monopolies” and encourage private investment in the power distribution sector, said one of the persons cited earlier.

Power minister RK Singh had told ET in an interview on August 6 that the Union government expects state discoms to have rational, responsible governance structure at effective arm’s length from the state governments so that decisions are made based on prudential norms.

NTPC recently issued a job vacancy for the post of chief executive officer for its distribution arm NESCL, which was set up in 2002. The company has sought qualified professionals to apply for the position to run the distribution operations for a fixed tenure of three years. NTPC has a 50:50 joint venture company, Kinesco Power and Utility Private Ltd, with Kerala Industrial Infrastructure Development Corp to distribute power in KINFRA-owned industrial theme parks.

RECPDCL was incorporated in 2007 and is rendering consultancy services and project implementing services to 41 discoms and four cooperative societies in 27 states across India with a project cost more than Rs 85,000 crore. REC's transmission arm REC Power Transmission Projects Co is being merged with RECPDCL and the combined entity is expected to have a net worth of Rs 300 crore.
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