The state-run power giant NTPC Limited may buy a 7-10 percent stake in Power Exchange of India Ltd (PXIL), which is promoted by NSE India and National Commodity and Derivatives Exchange (NCDEX), sources exclusively told CNBC-TV18 on Tuesday.
CNBC-TV18 has learned that the talks are at an advanced stage. NTPC has not yet responded to queries sent by CNBC-TV18.
In 2018, NSE was looking to sell PXIL as the firm ran into losses but the sale never happened. As per March 31, 2020 filing, other shareholders in the company include GMR Energy Limited, Tata Power, Power Finance Corporation (PFC), Gujarat Urja Vikas Nigam Limited (GUVNL) and West Bengal state electricity distribution company.
Given the electricity shortage and volume increase on power exchanges, it is expected that NTPC’s foray into the exchange will bring more competition following volume increase on account of renewables and also due to policy changes in the long-term power purchase agreement.
The Ministry of Power on October 8 released a framework for the implementation of market-based economic despatch (MBED) to enhance competition in the power sector and lower the cost of electricity in the country.
The move will enable state discoms to plan power purchases from the day-ahead market at power exchange. They will also get a chance to meet electricity demand from the cheapest generating sources in India. Overall, it will benefit discoms, power generating companies and ultimately bring down some burden of electricity cost on consumers.
As reported by CNBC-TV18 on October 4, NTPC has prepared a Rs 15,000 crore divestment plan, which entails listing three of its 100 percent subsidiaries by 2024. The three subsidiaries are Renewable Energy (NTPC REL), North Eastern Electric Power Corporation (NEEPCO) and NTPC Vidyut Vyapar Nigam (NVVN).
Analysts believe NTPC could look at a higher stake in the power exchange to bring in competition in the sector and a turn around the company but it will also help the company in its divestment plans.
(Edited by : Kanishka Sarkar)