Mr H.S. Brahma power secretary said that the government has no plans to allow state owned generator NTPC Ltd to get into merchant power sales. He said that “We are not permitting them to sell merchant power.” Mr Brahma said certain States are hit by droughts, floods and cyclones, and under such conditions they will not be able to pay higher market rates for buying electricity.
Merchant power refers to electricity sold in the open market at market prices, as against the energy being tied up in long-term agreements with a single buyer at an agreed rate.
The government is of the view that NTPC should concentrate on other avenues in the power sector, such as wind and solar energy, rather than focusing on making profits through the open market selling.
NTPC had planned setting up merchant plants and the output from those plants would be sold in the open market at the market prices. At present, NTPC sells 100% of its generation to the state power utilities, distribution companies through long-term power purchase agreements. This exchange takes place as per the allocation finalized by the Union power ministry and based on the tariff determined by the Central power sector regulator, the CERC.
As per the Electricity Act of 2003, a generating company can supply electricity to any licensee. It can tie up for a part of its capacity in long-term power purchase agreement.
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