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Home News Power Sector News CERC asks PXIL to present turnaround plan to continue operations

CERC asks PXIL to present turnaround plan to continue operations

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PXILThe net worth of Power Exchange of India Ltd (PXIL), one of the two power exchanges in the country, has slipped into a negative zone. The exchange, which began operations in 2008, has also seen business volumes shrink to less than 20 per cent of total market volumes for the past two years. The Central Electricity Regulatory Commission (CERC) has set aside the exchange's petition for more time to increase the net worth and asked it for a detailed business plan. By the regulations, an exchange needs a minimum net worth of Rs 25 crore. Net worth also decides the settlement guarantee fund maintained by the exchange for trade settlement.

Official sources said the exchange had a choice of merger or closure. Under the regulations, a power exchange with less than 20 per cent market share for two years consecutively after two years of commencement of operations, will either close or merge with an existing one within six months.

However, this is viable only if there are more than two exchanges. There will be a third (the Indian Energy Exchange is a second) after the arrival of the National Power Exchange (NPEX), to be floated by NTPC. It has got approval for the exchange, in a joint venture with NHPC, Power Finance Corporation and Tata Consultancy Services and is expected to start operations within a year.

Detailed queries were sent by this newspaper to PXIL and its promoters, National Stock Exchange (NSE) and National Commodity and Derivatives Exchange (NCDEX), on PXIL's business plan for break even, profitability and fund infusion. While NCDEX routed the query to PXIL, NSE did not respond. In its reply, PXIL did not specify either a fund infusion plan or business plan and said, "PXIL has always been and will remain committed to a total compliance to all applicable statutes, as well as regulations, in all aspects of its operations, including in respect of net worth requirements under CERC (Power Market) Regulations, 2010. The management shall take necessary steps in this regard, when required. PXIL also enjoys complete support of its promoters."

Source- Business Standard


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