PXIL to relaunch ‘day-ahead spot’ contract in 6 weeks
Power Exchange India (PXIL), the electricity trading platform promoted by the National Stock Exchange (NSE) and National Commodity & Derivatives Exchange (NCDEX), is planning to relaunch day-ahead spot contracts in the next six weeks.
A day-ahead contract is a double-side closed auction, in which both buyers and sellers quote their prices daily between 10 am and noon for delivery the next day, depending upon a uniform price auction on a 15-minute time slot basis.
Launched in 2008 with the NSE, NCDEX and several large utilities as shareholders, PXIL subsequently turned unprofitable, with heavy attrition on the exchange. Its net worth turned negative by 2017.
However, it is now a zerodebt company. Over the past two years, PXIL has revived operations and enhanced trading in term-ahead (where participants trade electricity on a term basis) and REC (renewable energy certificate) contracts, with around 50 per cent and 30 per cent market share, respectively. It is now making a profit month-onmonth, which has helped its net worth reach ~21.5 crore without raising of more capital from existing shareholders, or any new ones.
“We have two years to meet our minimum net worth criterion of ~25 crore, which is achievable. Both our promoter shareholders, the NSE and NCDEX, are confident. We are looking to re-launch day-ahead spot contracts in the next six weeks,” said Managing Director Prabhajit Kumar Sarkar.
By the end of FY21, it says the objective is to gain 30 per cent market share in dayahead spot contracts, on an accelerated turnover basis.
At present, the Indian Energy Exchange enjoys almost 99 per cent market share in this segment.
“We have a membership base in hundreds, with leading power generation and distribution companies enrolled on our platform, either as a member or client. We are continuously making efforts to expand our membership base, without unnecessarily lowering our transaction fees, annual or membership fees.
nnnnLaunched in 2008, PXIL turned unprofitable
Revived operations and enhanced trading in term-ahead and REC contracts; now a zero-debt firm
By the end of FY21, it aims for 30% market share in day-ahead spot contracts In talks with power generation firms, state utilities, cross-border integrations to expand its horizon
We are in talks with power generation and distribution companies, state utilities and cross-border integrations in Bhutan, Nepal and Bangladesh to expand our horizon,” said Sarkar.
At present, there is a regulatory overlap between the Securities and Exchange Board of India (Sebi), and the Central Electricity Regulatory Commission (CERC).
Contracts below T+11 (delivery till 11 days of trading) are regulated by the latter.
The Union ministry of power is understood to have intervened and there are hopes that all physical delivery contracts will be under CERC, with financial contracts in Sebi’s domain.
Power Finance Corporation, Gujarat Urja, the state utilities of West Bengal and Madhya Pradesh, JSW Energy, Tata Power Trading and GMR are other shareholders in PXIL.
“We approached members of the energy value chain to convince them about fair price discovery in power trading business. In the absence of fair competition, one single platform creates a virtual monopoly. With an alternate platform available, traders would be able to discover healthy trading opportunity,” said Sarkar.