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Power exchanges in India pursue National Power Eexchange Ltd for partnerships

According to reports, the existing power exchanges are pursuing the National Power Exchange Ltd (NPEX) to carry out business jointly.

Sources privy to the development said that NPEX has got feelers from the Indian Energy Exchange (IEX) and Power Exchange India Ltd (PXIL) to come in as a partner.

“The power trading market in the country is very shallow at present. NPEX is exploring whether there is room for a third exchange in the country or to do business jointly,” sources added.

NPEX is a joint venture promoted by NTPC, NHPC, Power Finance Corporation and Tata Consultancy Services to undertake the business of setting up and operating a national-level power exchange. Its other equity partners are Bombay Stock Exchange, IFCI, Meenakshi Power and DPSC.

Mr Arup Roy Choudhury, Chairman and Managing Director, NTPC, said, “We are reviewing if there is scope for the survival of another exchange in the country.”

NPEX has already got the final nod from the Central Electricity Regulatory Commission (CERC). Sources said the time taken (almost three years since its inception) to reach this stage has been mainly because NPEX has been treading cautiously, learning from the experience of the existing two exchanges.

CERC market regulation stipulates that in India, technically, five exchanges can co-exist. Besides, the CERC regulations stipulate that if any exchange is unable to garner 20 per cent of market share within two years of its operations, then either it closes down or can be merged with the more successful one, provided three exchanges are in operation.

Today, power purchase from exchanges accounts for about less than 2 per cent of the total consumption. The project involves an investment of about Rs 50 crore.

The Central and State Electricity Regulatory Commissions have powers to grant inter-State and intra-State trading licenses. According to CERC, there are 40 inter-State trading licensees as on March 31, 2011. Current participants in power trading business include PTC, NVVN, Tata Power Trading Company, and GMR Energy among others.

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