The Hindu Business Line : Essar, Jindal, Nagarjuna plan to sell electricity

THE power trading business is in for a quantum jump. Promoters of at least 10 major power projects in the pipeline — with a cumulative installed capacity in excess of 6,000 MW — are planning to sell the electricity generated by their plants to power trading outfits. This marks a departure from the traditional, and somewhat inflexible, model of selling power directly to the State electricity boards (SEB) or other distributors.

The projects, where traders are likely to offtake power, include Essar Power's 1,500-MW Hazira project, Jindal Power's 1,000-MW Raigarh project, Nagarjuna Power Corporation's 1,015-MW Mangalore project and the Jaypee Group's 1,000 MW Karcham Wang-too hydroelectric power project in Himachal Pradesh, industry sources said.

"Despite transmission capacity constraints, power trading could get a major fillip with nearly half the power generation capacity coming up in the private sector over the next couple of years being pledged to power traders. As the transmission links get strengthened, the power purchase agreement-based offtake arrangements inked with SEBs could go out of vogue," a power sector analyst said.

With National Thermal Power Corporation's trading arm also kicking-off operations, it is only a matter of time that the country's largest power producer also explores the possibility of routing its power to eventual buyers through its trading subsidiary.

So far power trading has been a fledgling business in the country, even as a large number of players have bagged trading licences and have kicked-off their trading business.

According to industry players, while most of the promoters are in talks with Power Trading Corporation for selling the entire generation from their plants, other traders such as NTPC Vidyut Vyapar Nigam Ltd, Reliance Energy, Tata Power, Essar Power and Amalgamated Power are also in the fray for trading assignments.

"All these power projects are extremely viable in terms of their tariffs. Therefore, finding buyers for power generated by them should not be difficult for traders," a power trader involved with one of the projects said.

The retail tariff for the Nagarjuna project is expected be at around Rs 2.08 per unit; for Essar around Rs 2.20 per unit, while Jaypee Group's would be around Rs 2.08 per unit, industry sources said.

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