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The Central Electricity Regulatory Commission (CERC) has issued draft regulations on the criteria for appointment of a director on the board of a power exchange.
Those persons convicted by a court for moral turpitude, fraud or any economic offence or criminal offence will be ineligible. Also, anyone found guilty for non-compliance with any provisions of a regulatory Act or the related rules, for a three-year period from the date of such an order. Plus, any person restrained or barred by any other regulatory authority.
Currently, there are two power exchanges, Indian Energy Exchange (IEX) and Power Exchange India (PXIL). IEX, founded and promoted by Financial Technologies (FTIL), has a daily turnover of 80,000 Mwh (megawatt hours). PXIL is promoted by National Stock Exchange of India and National Commodity & Derivatives Exchange. Its daily turnover is 2,000 Mwh. IEX and PXIL preferred not to comment on CERC’s proposed amendment.
FTIL promoter Jignesh Shah, found not “fit and proper” to run any bourse by the commodities market watchdog, the Forward Markets Commission (FMC), is a non-executive director on IEX’s board of directors. FMC gave its ruling after the Rs 5,500 crore payment crisis at National Spot Exchange Ltd. CERC has made it clear that the proposed qualification and disqualification criteria will also be applicable to the existing directors of the power exchange. It says it has sought information from IEX on action being taken by its board with regard to Jignesh Shah and FTIL’s shareholding.
CERC chairman Girish Pradhan told Business Standard: “Given the present circumstances and developments in the market, it was felt that the lacuna be filled up in the CERC regulations.”
CERC’s former chairman Pramod Deo said the value of electricity traded on the two power exchanges was nearly $1 billion. “For such an important market infrastructure institution, it is imperative that the board of directors consist of persons with financial integrity and probity in public life. CERC has, therefore, rightly proposed to prescribe criteria for qualifications and disqualifications for appointment as Directors in the Board of Power Exchanges as part of the Power Market Regulations,''he added.
Further, CERC in the draft amendment proposed that the person will be disqualified for appointment of director if found guilty in any proceedings for non compliance of any of the provisions of the Act of the rules or the regulations and order made by the Appropriate Commission. CERC has specified that a period of three year from the date of order has not elapsed.
Moreover, the person, who has been restrained, prohibited, debarred by any other regulatory authority, will be disqualified. This apart, the person if insolvent and has not be discharged and an order for winding up has been passed against him or her won't be appointed as director.
