Having secured a licence, Neyveli Lignite Corporation will be independently trading in the power market through a power trading arm. The company hopes that the new development will double its revenue from trading.
NLC has secured a Category I licence for power trading from Central Electricity Regulatory Commission last week. With this licence, the company can independently trade in the power market.
“As a part of its business promotion and diversification plan NLCIL has joined the league of Accredited Power Traders in the country,” the company said.
The company has been trading power for the past two years without a licence. During the past two years, it would sell the unrequisitioned or surrendered surplus power by the discoms, which they were not able to sell due to changing demand-supply scenario.
NLC was trading this through National Thermal Power Corporation’s trading arm, NTPC Vidyut Vyapar Nigam, as it could not buy and sell independently in the market without a licence.
Now with the licence, NLC can form its own power-trading arm. It can enter into bilateral agreements with power generating companies and buy their underutilised capacity and sell it to discoms, mainly in the southern states.
“Some of the power plants in the southern region have not tied up for their full capacity with power purchase agreements. Such plants would sell us the surplus for lower rates, which we would in turn sell to the discoms,” said A Ganesan, DGM, Finance, NLC. The trading of surplus power in the market will pave the way for effective utilisation of generating capacity of GENCOS. The surplus power otherwise would have gone waste, he added.
In 2016-17, NLC had garnered a revenue of Rs 134 crore from power trading and this went up to Rs 294 crore in 2017-18. With the launch of independent trading, NLC expects to more than double the revenue from trading this fiscal. With volumes picking up, NLC hopes that trading will also help the company improve its profit margins.