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Power Trading Corp capital to be raised to Rs 50 billion

Lola Nayar in New Delhi

The government is mulling a proposal to raise the capital base of Power Trading Corporation from Rs 1.5 billion to Rs 50 billion to provide it more liquidity for procuring power from mega projects.

It is also likely to take a stake in India's nodal agency for power trading within the country and with neighbouring countries like Bhutan and Nepal.

"The central government is likely to contribute up to Rs. 5 billion or take 10 per cent stake, once the proposal of raising the capital to Rs 50 billion is approved," official sources said.

Set up in 1999 for catalysing development of big power projects and trading of power, 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.

"A cabinet draft for raising the capital base has been prepared and would be put up for approval soon," the officials said.

The additional capital is to be raised through a mix of debt/equity, funded and non-funded capital.

The move is in response to PTC's demand for payment security mechanism and discretionary powers from the federal government to stop supply of power to defaulting states. Currently under its weekly billing system, the corporation has been protecting its interests by taking two weeks payment security to meet its commitment to the developers.

When contacted PTC chairman and managing director Tantra Narayan Thakur admitted that a proposal to raise the corporation's capital base to Rs 50 billion has been prepared by the power ministry and that a cabinet approval is awaited.

"The proposal will provide us the liquidity and take care of any curing in default of payment by the offtakers of power," said Thakur.

He added that the current capital of Rs 1.5 billion is inadequate to support large power transactions in the region of 10,000 MW.

"So far there has been no problem as the volume of power we are trading is comparatively small. The risk factor will come into play once we start supplying power from mega projects in the pipeline," Thakur said.

The corporation, which is currently supplying one billion units of power to different states including 200 MW to Delhi, is targeting supply of 2 billion units by yearend, including surplus power from Bhutan.

The PTC is currently looking at mega projects like Hirma (4,000 MW) project in Orissa, Pipavav (2,000 MW) in Gujarat, Maithan (1,000 MW) in Bihar and Ennore (1,850 MW) in Tamil Nadu, in addition to Tala (1,000 MW) and Chukha power (236 MW) projects in Bhutan for trading power.

In the light of difficulties being faced by power companies in recovering their dues from state electricity boards, Thakur said there is need to further speed up reforms in the states.

"The progress is slower than anticipated in the maintenance of lines and systems, billing and collection, and in checking transmission and distribution losses."

Despite keeping less than five paise margin or 2 per cent of power cost on trading of power, PTC which started trading on a regular basis from February, has been successful in not "only managing our expenses but are also able to keep reserves."

Indo-Asian News Service

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