Power Trading faces stakeholder competition

Power Trading Corporation of India (PTC) is facing the prospect of competition from its own shareholders - National Thermal Power Corporation (NTPC) and Tata Power Company - both of which have set up wholly-owned trading arms.

This has been identified as a risk factor by PTC in the Red Herring prospectus filed by the company ahead of the initial public offering.

NTPC, which has a 13.11 per cent stake in PTC, has incorporated a wholly-owned arm for trading, NTPC Vidyut Vyapar Nigam. Tata Power, which at present has a stake of 10 per cent, too has formed a 100 per cent subsidiary, Tata Power Trading.

"Competition from these entities and a possible conflict of interest could affect our performance and competitiveness," PTC has said in the Red Herring prospectus.

"Due to technical complexities involved in the transport of power, which is the main task of the corporation and in which it has already proved its competence, there will be interest in utilising its services by generators even when it may be for their in-house trading," said T N Thakur, CMD of PTC.

Tata Power is believed to be in discussions with PTC for utilising its services for selling power from the Jojobera plant at Jharkhand to its Delhi distribution area.

Analysts say the entry of other private players in power trading would result in the growth of the market which would benefit all the players.

Rival inside

• Competition NTPC and Tata Power identified as a risk in the Red Herring prospectus.
• NTPC has a 13.11 per cent stake, while Tata Power has 10 per cent.
• Both NTPC and Tata Power have wholly owned power trading arms.