PowerGrid, REC to tie up for distribution

In a significant move to augment power distribution in the country, the Rural Electrification Corporation and the PowerGrid Corporation will shortly sign an agreement for setting up a joint venture company.

The company, a 50:50 partnership, will undertake power distribution projects in the country.

"The two companies have agreed in principle that the power distribution sector is going to be a good business and will take up distribution projects. Issues such as maintenance and distribution management will have to be examined," a power ministry official said.

Details about the scope of the new company are presently being worked out.

"With the Accelerated Power Development Reforms Programme likely to continue in the 11th Five-Year Plan (2007-12) with some changes, along with the Rajiv Gandhi Grameen Vidyutikaran Yojana's massive targets, scope for creation of distribution infrastructure is immense. Both the organisations view this as a big opportunity," the official added.

The new company will be formed keeping in view the fact that states, which are highly deficient in rural electrification, are also those that may be unable to implement these programmes on their own in the given time-frame.

States like Uttar Pradesh, Bihar, Jharkhand, Orissa, West Bengal and Assam, where household electricity is as low as 5-10 per cent, need sustainable support from central organisations.

PowerGrid, NTPC Ltd, National Hydroelectric Power Corporation and Damodar Valley Corporation assist these states in developing electrification infrastructure in rural areas.

"It is in this context that a need has been felt to create a JV of PowerGrid and Rural Electrification Corporation to exclusively focus on the distribution business," the official added.