The Hindu Business Line : NTPC moots central PSUs as power exchange promoters

At a glance
Initial promoters can chip in with about 50 per cent of the authorised capital in equal proportion.
Balance 50% can be issued subsequently to state power utility, FIs, banks

New Delhi , Dec. 25

The Rs 27,000-crore NTPC Ltd has proposed the establishment of a nation-wide power exchange (PX) as a separate company with power sector CPSEs as the initial promoters, and an authorised capital of around Rs 50 crore.

Based on the final report by its consultants — Norway's NordPool Consulting AS and Crisil Advisory Services — the power major has sounded out the Central Electricity Regulatory Commission (CERC) on the broad contours of the exchange being planned by it, including the governing body structure and modalities of executing transactions.

Besides NTPC, commodity bourses such as NCDEX and MCX have evinced interest in establishing and operating an Exchange.

The CERC, which plans to come out with guidelines for the project within a month, would invite interested parties for setting up the PX once the guidelines are the place.

According to NTPC's proposal, the initial promoters — including state-owned power firms such as transmission major Power Grid Corporation of India Ltd (PGCIL) and power trading firm PTC India Ltd, besides NTPC — can chip in with about 50 per cent of the authorised capital in equal proportion.

The balance 50 per cent can be issued subsequently to state power utility, financial institutions and banks, and the proposed company could have board level representations from CERC and the Government to ensure a more diversified ownership structure, according to the NTPC proposal.

CERC paper

The utility has said that shareholding of an individual entity may be limited to 25 per cent of the paid-up capital. NTPC has favoured the CERC staff paper on the establishment of a power exchange on parameters such as it being operated on the day-ahead basis and with trading blocks having hourly intervals.

A power exchange would basically function on the lines of commodity exchanges and provide a platform for buyers, sellers and traders of electricity to enter into spot and forward contracts.

Currently, inter-regional power transfer capacity of around 6,000 MW is available in the country, which is expected to increase further to about 9,500 MW in the coming few years.

With transmission capacity being put in place for large size inter-State projects, the inter-regional transfer capacity is likely to get further enhanced.

Nord Pool, the world's only multinational exchange for trading power and one of the most efficient pooling mechanisms, is owned by the national grid companies of Norway and Sweden.

The exchange, established in 1993, has a market council comprising power traders and industry representatives that acts as the advisory board for all its activities. The council, in turn, reports to Nord Pool's board of directors.