BSE to take stake in third power exchange

The Bombay Stock Exchange (BSE) is set to become a stakeholder in the National Power Exchange (NPX).Madhu Kannan, CEO and MD of BSE, said the exchange would pick up stake as a strategic investor and help develop the platform for the upcoming exchange.

NPX was initially promoted by NTPC, NHPC and Tata Consultancy Services (TCS). This will be the third power exchange after the Power Exchange of India (PXIL), promoted by the National Stock Exchange, and the Indian Energy Exchange (IEX), floated by Financial Technologies. The size of the stake and the consideration have not been disclosed.

At the moment, IEX is the bigger of the two, with around 300 members and daily average trades of 1,300 Mw. PXIL has less members and sees around 250 Mw daily trades. The IEX offers day-ahead trades, weekly trades, day-ahead contingency trades and intra-day transactions. PXIL also offers these contracts, except for intra-day trades.

The day-ahead deals account for a bulk of the trades and are operational all days of the year. Power trading is done through a double-sided auction market for delivery the following day.

According to the memorandum of association, the authorised share capital of NPX is Rs 50 crore, of which the initial paid-up share capital is Rs 5 crore. NTPC, NHPC and PFC have contributed 16.67 per cent each while TCS has contributed 50 per cent.

The shareholding of any individual party, along with its affiliates, will be restricted to 25 per cent of the paid-up share capital. Besides, no special rights will be available to any trading member holding NPX shares.The total traded volumes of power have grown from 2.1 per cent of the total generated capacity in financial year 2004 to more than five per cent, say analysts. The Indian power trading market promises to be attractive, as only two-five per cent power traded in India is currently on the exchanges.

However, the exchanges have seen volumes stagnate, as rates have decreased to around Rs 3.5 per unit after touching a high of Rs 10 per unit in the previous year. This is due to more bilateral trades, say experts.