Business Standard

Recapitalisation Of Power Trading Corp Soon

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BUSINESS STANDARD

The recapitalisation of Power Trading Corporation (PTC) is set to take place with the differences between the finance and the power ministry having more or less been ironed out.

The group of ministers (GoM), which was considering the proposal is expected to clear beefing up PTC's capital from the present Rs 40 crore to Rs 3,000 crore by the end of this month, senior government officials said.

The GoM is likely to approve the cabinet note forwarded by the power ministry for raising the authorised capital of PTC to Rs 5,000 crore and the paid-up capital to Rs 3,000 crore over the next five years, power ministry officials said.

 

With recapitalisation happening, PTC's trading capacity would go up to 3,000 mw over the next 2-3 years, from about 500 mw being handled by the company presently, officials said.

The power ministry has been able to impress upon the administration on the need to capitalise PTC in order to ensure that it is able to play a part in reducing inter-regional disparities in power supply across states. Moreover the incentive to state-level reforms stems from the rider that PTC would sell energy from the IPPs only to those states which undertake reforms, officials said.

PTC was conceived as a company that would trade in power by buying it from private generating companies and selling it to state electricity boards. The GoM on had met in October last year, but the member failed to reach a decision on the issue on account of differences between the finance ministry and power ministry on raising the paid-up capital of PTC.

The power ministry has been arguing that additional capital infusion was needed to assure independent power producers about PTC's ability to pay for the power it will buy from them. The ministry also asked for raising funds through issue of government backed debentures.

The ministry had asked the centre for Rs 1,000 crore to be provided to PTC, while the balance Rs 2,000 crore was proposed to be raised from PTC's equity stake holders, besides a public issue.

The finance ministry, however, was of the view that infusion of such a large amount of money into PTC would have resulted in the company taking increased exposures in power projects, thereby raising the possibility of defaults.

The finance ministry has voiced its reservations to the public issue in light of the depressed market situation.

PTC was incorporated in 1999 with an authorised capital of Rs 150 crore. The company has so far received Rs 24 crore as equity from its promoters -- National Thermal Power Corporation (NTPC), Powergrid and Power Finance Corporation (PFC) and an amount of Rs 16 crore has been raised from financial institutions and other investment companies.

The decision to recapitalise PTC would also be significant in light of the pending Electricity Bill, which seeks to open up the sector for trading of power.

The Centre had allocated Rs 50 crore for PTC in the current fiscal. PTC is at present negotiating power purchase agreements (PPAs) for purchase of power from two large projects--Hirma (3,960 mw) in Orissa and Ennore (1,850 mw) in Tamil Nadu. In addition, PTC has taken up development of Pipavav mega power project (2,000 mw) through the international commercial borrowings route.

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First Published: Feb 18 2002 | 12:00 AM IST

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