New Delhi: India’s largest power generation company, NTPC Ltd, after having fallen out with the National Commodity and Derivatives Exchange of India (NCDEX) in the creation of a second electricity trading exchange in the country, is all set to form a new platform along with National Hydroelectric Power Corp. Ltd (NHPC), Tata Consultancy Services Ltd (TCS) and Power Finance Corp. Ltd (PFC).
“An agreement (for the exchange’s creation) will be signed between three state-run firms NTPC, NHPC and PFC and TCS,” T. Sankaralingam, chairman and managing director, NTPC Ltd, told PTI.
New pact: NTPC chairman and managing director T. Sankaralingam.
NTPC is expected to sign the agreement with the other companies by end-March to set the power exchange.
A power exchange functions on the lines of commodity exchanges and provides a platform for buyers, sellers and traders of electricity to enter into spot and forward contracts. It would also provide a payment security mechanism to buyers and sellers.
Power trading can be done only through an exchange which will provide the platform to carry on the trading business. In NTPC’s tie-up with NCDEX, the latter was to provide the platform for which it got an in-principle clearance from the power sector regulator, Central Electricity Regulatory Commission (CERC).
The move to set up the exchange along with NCDEX was called off following irreconcilable differences among the initial group of promoters. Besides NCDEX and NTPC, other investors in the venture were National Stock Exchange of India Ltd (NSE), NHPC and PFC.
The fallout was because NTPC was unwilling to allow NSE a bigger role in management control in the project. Further, the two differed on the move to accord promoter and not investor status to TCS, which was to provide the technology solutions as reported by Mint on 15 February.
A Mumbai-based power sector analyst, who did not wish to be identified because of commercial considerations, said, “It seems difficult for this new exchange to be set up due to the clearances that will be required from CERC.”
The newly proposed venture is expected to rival the India Energy Exchange (IEX), promoted by Financial Technologies India Ltd (FTIL) and PTC India Ltd, which plans to start operations in the first quarter of fiscal 2009, starting April.
FTIL has a 44% stake and Power Trading Corp. a 26% in the exchange with the balance being held by power firms such as Reliance Power Ltd and Tata Power, and trading firm Adani Enterprises Ltd.
MCX executives who did not wish to be identified said, “NTPC was talking to us for a possible participation in IEX. Since NTPC was asking for a larger share at IEX, it was difficult to accommodate.”
Sankaralingam declined comment.
PTI contributed to this story.