Power trading to catch on among Gujarat units

New entrants from the private sector who made their way into the booming power sector after its liberalisation and abolition of the licence Raj in power generation have yet another new avenue to trade their produce (electricity).

Looking at the potential of power trading, three Gujarat-based firms have signed up for it with India¿s sole power trading company, PTC India Ltd. One of the companies is already into power generation while the other two are involved in non-power related businesses and would be selling power from their captive power stations.

According to sources, PTC India has signed a Power Purchase Agreement (PPA) for 5,067.5 mega watt (Mw) according to the status till August 2007. While standby PPA is 128.8 Mw and initiated PPA is 3837.5 Mw. While out of the many PPAs signed by PTC India, a company is from Gujarat.

Torrent Power Generation Ltd (TPGL), for Sugen Gas-based thermal power project in Gujarat for 100 Mw. The agreement was signed on August 2, 2005. The beneficiary state will be Madhya Pradesh, which borders Gujarat. TPGL's Sugen project has a generation capacity of 1,100 Mw.

According to experts in the power sector, trading of power is beneficial to both the consumer as well as the producer (generation company).

With the availability of a trading system, a power generation company can sell excess power generated during the time its facility is idle. This is important for captive power plants where power requirement is not always at the peak and the company converts its capacity to generate excess power that can be sold or traded.

Recently, PTC India has signed a Memorandum of Understanding (MoU) for 17,099 Mw with various power generating units throughout the country. Of this, PTC has entered into long term MoUs for a total of 4,970.5 Mw with the power generating company for purchase of power from the western region.

From Gujarat, the most significant of these are 1,500 Mw imported coal-based thermal power project of Sanghi Industries, that is expected to be commissioned in 2010. While another is for the 420 Mw imported coal-based thermal power project of Videocon Industries Ltd, which is expected to be commissioned in the year 2011.

Videocon is coming up with a 1,000 mw coal-based power plant near Pipavav port in Gujarat in collaboration with L&T. Presently, Sanghi Industries, has a 45.33 Mw capacity power plant operated on residual fuel (heavy furnace oil) to meet uninterrupted power requirement.

An expert on power, said, "Gujarat based industries are now taking keen interest in trading of its power." He added that power trading is setting its firm foot amongst Gujarat industries that will aid the industry to generate better returns from its captive power plants.

However, from the western region, maximum MoUs for purchase of power have been signed from the state of Chhatisgarh that amounts to 1,950.5 Mw, while MoUs for 100 Mw have been signed with the state of Madhya Pradesh.

From Chhattisgarh, Korba-West Power Company Ltd, R K M Powergen Private Ltd, AES Chhattisgarh Engery Pvt Ltd and Patni Power Projects Pvt Ltd have entered into long-term MoU for purchase of power. Whereas from Madhya Pradesh, MP Power Generating Company Ltd had signed an MoU for purchase of power with PTC India.

All of them are coal-based thermal power projects and most of them will be commissioned in years between the years from 2010 to the year 2012.

According to a experts on power, India plans to add 78,577 Mw of power generation capacity by 2010 mainly from coal-fired units to overcome shortage in electricity.

With the availability of power trading platform, power generation can be used up to the fullest capacity and will aid to overcome shortage of electricity in other parts of the country, with power generation firms getting the benefit of better tariff price for the power.