The Hindu Business Line : Two consortia in race to set up power exchanges

Power plans
Power Trading Corpn has evinced interest in partnering either or both the consortia, and is likely to go in with the venture that bags regulatory clearance first.
Other smaller players have also evinced interest though they could finally merge into either of the two major exchanges on the anvil.

New Delhi June 17 Two major contenders are in the fray to set up national power exchanges (PXs). The first is a heavyweight joint venture company being promoted by NTPC Ltd, Power Grid Corporation of India Ltd, Power Finance Corporation, National Hydroelectric Power Corporation and National Commodities and Derivatives Exchange Ltd. The second contender is a Financial Technologies (India) Ltd-MCX (Multi Commodity Exchange)-led venture.

Both ventures are in the process of getting the regulatory nod from the Central Electricity Regulatory Commission (CERC) for setting up the exchanges. PTC India Ltd, the country's largest power trading firm, has evinced interest in partnering either or both the consortia, and is likely to go in with the venture that bags regulatory clearance first.

A handful of other smaller players have also evinced interest in setting up an exchange, though it is expected that they could finally merge into either of the two major Exchanges on the anvil. CERC had earlier said that at least one power exchange would get operational by the year-end.

A power exchange would basically function on the lines of a commodity exchange and provide a platform for buyers, sellers and traders of electricity to enter into spot and forward contracts. It would offer a market-based institution for providing price-discovery and price risk management to the generators, distribution licensees, traders, consumers and other players in the sector.

Currently, inter-regional power transfer capacity of slightly over 6,000 MW is available in the country, which is expected to increase to about 9,500 MW in the coming years, according to Government estimates. Short-term power trading or trading on daily requirement accounts for about 15 per cent of the total power trading volumes on an average.

The NTPC-led joint venture is likely to have an authorised capital of around Rs 50 crore. The proposal is broadly based on the model suggested by NTPC's consultants — Norway's NordPool Consulting AS and Crisil Advisory Services.

MCX-led exchange

In the case of the MCX-led proposed exchange, named Indian Energy Exchange Ltd (IEEL), the holding pattern among the lead promoters is still being finalised. While the option of inducting more players in the venture is being looked at, the combined holding of Financial Technologies-MCX is likely to be not less than 51 per cent, industry sources said. The authorised capital of IEEL is likely to be around Rs 25 crore.

The CERC had, in February this year, issued guidelines for grant of permission to operators wanting to set up and operate a power exchange in the country. Without stipulating a cap on the number of exchanges that can be set up by prospective players, the regulator had broadly prescribed the need for a clear ring-fencing between ownership, management and participation in the proposed power exchange and the requirement for an efficient financial settlement and guarantee system.

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