The Hindu Business Line : Cap on margins may dent power trading cos' profits

Power trading firms such as Adani Exports Ltd, Tata Power Trading Company Ltd, Reliance Energy Trading Ltd and PTC India Ltd could be the among the worst hit by the four-paise cap on trading margins imposed by the regulator, even as nearly all players in the business could see a dent in profits.

All the leading power traders have been trading electricity at margins much higher than that the limit of four paise per unit of traded power stipulated by the Central Electricity Regulatory Commission (CERC), resulting in the weighted average trading margin shooting up from around six paise per unit in 2004-05 to about 10 paise during the first half of last fiscal, according to Government data.

While PTC India Ltd and Adani Exports Ltd are listed companies, Tata Power Trading Company and Reliance Energy Trading are subsidiaries of listed firms.

PTC India Ltd, the market leader in the power trading business, carried out 71 per cent of its total trading volumes in the 6-10 paise trading margin bracket during April-September 2005.

Adani Exports traded around 93 per cent of its total volumes during the period at margins of over five paise and above, with over 54 per cent trading being done by the company at much higher margins of 11-20 paise per unit. Also, over 20 per cent of the company's total trading volume was executed at margins of over 44 paise per unit. In fact, the company had charged the highest trading margin in a single transaction at 128 paise per unit during the period.

While Tata Power traded over 99 per cent of total volumes above four paise per unit margin levels during April-September last year, 53.80 per cent of the company's total volume was traded at margins of 5 paise per unit. The company recorded trading volumes of 38 per cent in the 6-20 paise margin category while another seven per cent of the total power trade volume was carried out by the company in the 21-100 paise per unit margin levels. Reliance Energy traded around 92 per cent of total volumes in the 5-20 paise bracket, while NTPC's power trading subsidiary transacted around 91 per cent of its total volumes in the five paise per unit margin levels.