The US power major Enron Corporation has decided to set up a power trading company to deal in inter-state sale of power in the country.
According to sources, Enron will shortly submit a proposal to the Foreign Investment Promotion Board for necessary approvals.
A power trading corporation is like an exchange where buyers and sellers can trade on a real-time basis. States with surplus power even for a short period can ask the company to sell to any state which requires it.
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The company has initiated negotiations with several states_like Karnataka, Gujarat, Rajasthan, and Andhra Pradesh_to create the broad outlines of the concept.
The sources said the new company would be based the model of Enron's own operations in the US where it is one of the largest power traders. Enron is also a large trader in gas and telecom bandwidth.
Sources in the power industry said a power trading company does the twin task of making the market in the commodity and also handles the contractual framework.
"It is like a stock market clearing corporation which guarantees that trades will be put through and payments will be made on time, without the risk of default," the sources explained.
"A large part of the deal is a contractual network that will allow the movement of power from the grid to the consumer with the help of transmission lines owned by state electricity boards," the source noted.
At present, there is no framework for physical transmission of power and financial transaction, the source said, adding, "There should be certain contractual regulations, which need to be codified."
Moreover, the power trading company may not need a large investment since the only requirement will be intellectual capital.
The trading company is expected to leverage Enron's interest in setting up power projects across the country. Currently Enron's operations is restricted to Maharashtra with the 740 MW phase-I Dabhol power project on stream and the second phase of 1,444 MW under construction. It also has a 49 per cent stake in the 330 MW Ispat Power Project.