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PTC seeks safeguard against power payment defaulters

Lola Nayar in New Delhi

India's nodal agency for exchange of power, the Power Trading Corporation, has sought a payment security mechanism and discretionary powers from the federal government to stop supply to defaulting states.

"We have urged the power ministry for a security mechanism to ensure against any default in payment. We have also sought empowerment and flexibility to divert power from a defaulting buyer state to another," a PTC official said.

Set up in 1999 for catalysing development of big power projects and trading of power both within India and with neighboring countries, the PTC has already completed two short-term transactions supplying power from Maharashtra to Karnataka and Punjab to Gujarat totalling 72 million units.

A non-governmental company with an authorised capital of Rs 1.5 billion, the PTC is promoted by three government companies -- the Power Grid Corporation of India Ltd with 30 per cent equity stake, the National Thermal Power Corporation Ltd. with 15 per cent and the Power Finance Corporation Ltd with 15 per cent. The balance 40 per cent equity is to be raised from other financial institutions.

So far the PTC has received Rs 240 million as equity subscription from its three promoters and is holding discussions with financial institutions and investment companies for the remaining equity contribution.

Since February it has contracted trading of power on a regular basis. Under agreement with the West Bengal Power Development Corporation, it is to supply 200 megawatts power to the northern region.

With the commissioning of the 400 KV D/C transmission link from Bihar Sharif to Allahabad, the PTC is supplying 100 MW power to Delhi and 60 MW to Haryana.

Under another agreement, it is supplying 70 MW power from Malana hydro-project in Himachal Pradesh to Delhi.

The PTC has also entered into agreement to supply around 100-150 MW surplus power from Chhattisgarh State Electricity Board to deficit states in other regions.

"We are in touch with the state governments of Goa and Orissa also for trading their surplus power, estimated at 100 MW each," said the official.

Despite the reform process underway in several state electricity boards, the PTC is not taking any chances. It has introduced a weekly payment system to "minimize our risks and liability." The official said, "In the case of default in payment, we can stop power supply within a week".

Currently political compulsions stand in the way of stopping and diversion of power supply from erring states. This could hamper the establishment of a competitive power market resulting in economic use of existing resources and reduction in cost supply, feel PTC officials.

Aiming at doubling its current power generation capacity of 100,000 MW in the next decade, India has been pushing the states to implement reforms to enable their electricity boards to meet their financial commitments and attract new investments.

The PTC is seeking security against future commitments. "As the volume grows, there will be problems in case of default. The security in the form of fixed deposit or letter of credit would provide us better financial liquidity to meet the situation."

The official said, "Flexibility or empowerment to divert power from the payment defaulting state to another would cover our commitment to the seller."

As the volume grows, the PTC is hopeful of providing long-term transactions at competitive rates.

Indo-Asian News Service

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