NTPC keen to enter power distribution in Gujarat

After signing up for building a 2000-mw power project in Pipavav, National Thermal Power Corporation (NTPC) is now showing interest in foraying into power distribution in Gujarat.

The firm has sought approval from the state government and the Gujarat Electricity Regulatory Commission (GERC).

A top state government official confirmed the development and said a new joint venture will be created for the power distribution business, in which NTPC is expected to hold 50 per cent stake and the rest by Gujarat Power Corporation Ltd (GPCL) and Gujarat Electricity Board (GEB).

Manjula Subramaniam, principal secretary of the state energy department, said, "Following the recent signing of a memorandum of understanding (MoU) with GPCL, GEB, NTPC officials had sought government approval for getting into power distribution in the state which is being positively considered by the government. A final decision in this respect is expected to be taken in another two months."

On February 22, NTPC signed a MoU with GPCL and GEB, representing the state government for setting up a 2000-mw power plant at Pipavav in Amreili district. The project is estimated to draw an investment of around Rs 6,000 crore.

"As a condition of the MoU, we have agreed in principle to give NTPC the rights for power distribution but it should be a combined effort of the joint venture, in which GPCL will also be a partner along with GEB. However, we also need to get approval from GERC as per the new Electricity Act, 2003, for which processing will be initiated shortly," I P Gautam, managing director of GPCL, said.

According to sources, the new company may be given the rights for distribution of power in Saurashtra region where power crisis has increased over the last two years and GEB's operations also has failed to improve the situation.

"As GEB's losses are mounting and it is not in a position to invest in strengthening its infrastructure and add manpower, the state government has now decided to prefer other parties, except GEB, to enter into power distribution which will not only improve the power condition in Gujarat but will also help bringing in new investment into the state," a senior state government official said, on condition of anonymity.