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The Union government plans to set up a national power distribution company that will handhold state discoms in electricity distribution activities and ensure time-bound implementation of central schemes. The proposed company will compete with private firms and contractors to bag contracts of state-run distribution companies for appointing franchisees or engineering tenders, officials said.

Apart from small distribution consultancy wings in Rural Electrification Corporation, Power Grid Corporation and NTPC, the central government has no presence in electricity distribution sector.

The Union government has presence in all the power sector segments, be it financing, generation or transmission, but power distribution has always been out of focus and a laggard in the entire system,” said a senior government official, speaking on condition of anonymity.

The proposed company may or may not obtain a distribution license, said another government official, adding it will not interfere in the working of state power distribution companies given the federal structure.

The government proposes to electrify all households and provide reliable electricity supply by March next year. The draft Electricity Act, likely to be circulated for comments this week, provides for separation of distribution infrastructure ownership from power supply licenses and also penalties on discoms for gratuitous load-shedding. India has also been trying to achieve smart metering and smart grid network.