NTPC, India’s largest power generator, plans to expand its power distribution business. The company expects to quickly finalise a partner for its distribution arm, NTPC Electric Supply Company Ltd (NESCL).
The plan is to float a new joint venture with a partner selected through bidding. NESCL has already floated an EoI (expression of interest) inviting companies with five years of experience and a minimum average net worth of Rs 500 crore in the past three financial years.
Talking Business Standard, NTPC Chairman and Managing Director Arup Roy Choudhury confirmed this. “NESCL is expanding its distribution business, for which EoIs have been invited from distribution licensees having experience of successfully running the distribution business,” said Chaudhury. “NESCL will explore a viable business model along with the selected partner as a licencee. But this EOI does not cover the scheme for providing infrastructure for electricity around our projects,” he added.
Buoyed by the recently-announced debt restructuring scheme, which induces state electricity boards to privatise distribution, NTPC plans to capitalise on the positive momentum in the power sector.
NESCL, floated in 2002, takes up consultancy assignments for state distribution companies, apart from providing project monitoring and inspection services. NESCL has a joint venture with the Kerala Industrial Infrastructure Development Corporation (KIIDC) to take up retail distribution of power in industrial parks in Kochi.
For the past three years, NTPC has been planning a full-fledged entry into power distribution segment but with little success. The company had earlier proposed to set up distribution networks in Kanpur, Patna and Mangalore, among other cities, but the plan could not fructify.
Roping in private partners is one condition stipulated by the government for the state distribution utilities to adopt the bail-out package. The distribution companies had accumulated losses of Rs 2.46 lakh crore as on March 31, 2012.
The short-term debt of seven states -- Rajasthan, Uttar Pradesh, Madhya Pradesh, Andhra Pradesh, Punjab, Haryana and Tamil Nadu -- which together account for 75 per cent of the debt liability of all the discoms, stood at Rs 1.2 lakh crore in March.