Petition for development of new power exchange in India has been filed with CERC: Deepak Amitabh, PTC India

Budget can be a very useful mode of putting investment into any sector where the government wants to pay attention, says Deepak Amitabh, chairman and managing director, PTC India. During an interview with Swati Khandelwal, Zee Business, Amitabh said two power exchanges are required in India as it will help in bringing new products in the market. Excerpts:  

Q: What are your expectation from the Union Budget 2019?
A: What is Budget? Budget can be a very useful mode of putting investment into any sector, where the government wants to pay attention. Funding is a major challenge for the power sector. So, the government - through the budget - should bring in any incentive where the retail investors' money can be used for funding the power sector. The initiative can be something like tax-free bonds, which existed in the past as well, as it will help in bringing retail investors money towards power sector, which is a growing sector where needs investment is in a continuously growing status. 

Apart from this, we were thinking that whether any further incentives can be planned like a fiscal incentive for energy efficient gadgets. In addition, the distribution sector is facing a huge challenge and it can be partially dealt by providing an incentive structure – through the budget – for those who can afford and want to pay in advance for a period of six months. As such a step will ease the cashflow problem being faced by the distribution companies. 

The third thing that comes to my mind is that the power sector, which is an essential item like water and housing, should be provided with budget incentives. And I am saying this because the impact of budget incentives – in form of exemptions – to health, insurance and housing sector is visible as they have been able to open new hospitals and health services among others. So, these steps will help the sector a lot.
 
Besides, certain incentives should be provided to our inefficient generation assets, which should be phased out as they turn up to be a burden on the society, as they consume more coal and produce less electricity and have an impact on the environment. Incentivising these assets will benefit us in two different ways and they are (i) It will have a direct impact on the environment and economy as an inefficient system is out from the process and (ii) A huge amount of money of the banks is stuck in new and good projects, which has not been completed yet but have reached the 3/4th or 4/5th stage of completion. Removal of these inefficient assets and incentivising will help in completing the new projects, which is based on new technology and return the banks money. In short, it will help the sector as well as the country. 

Q: There were talks that PTC is looking to exit wind power business and NTPC and ReNew Power have shown their interest in it. Let us know about it? 
A:  See, we cannot say anything until something conclusive doesn’t takes place, but I will not like to name the entity with which we are having dialogues. But it, the dialogue is on, and I can say that an agreement will be reached soon if everything goes fine. 

Q: Can you provide a timeline for the deal? 
A: It is likely to be completed in the second quarter.

Q: Expected proceeds from the deal?
A: Can’t comment on it because the market is varying, and we are also facing certain policy challenges in states, where we have our wind assets. Actually, they, the state government have not been able to understand things, yet, and that’s why they keep changing things with certain things like long-term agreed PPAs, where they ask us to reduce or increase things. Thus, such situations can impact the valuation of the asset. But, PTC is not so much focused on valuation as such because we are very clear about our agenda of exiting from such business, which is not our core business, over a period. In fact, we are master in trading, a place that has ample opportunities to work, and it is our core. 

Q: Anything else from where you want to exit?
A: Our large investments include PTC energy, where we are working, and PTC India Finances services and they need funds. So, we have started a discussion on the design. Interestingly, we have invested a lot in PTC and are no more interested in investing more in the segment. So, over a period, these two investments will be used for monetization. These are our direct investment. Apart from this, we also have an indirect investment on Teesta Urja, where we have invested around Rs200 crore from PTC balance sheet. Teesta Urja is a government of Sikkim project, today. So, the project has been implemented successfully and it will be monetized maximum in the next 2-3 years. 

Q: Let us know about your role in power exchanges? 
A: It has a rational as complete Electricity Act, 2003, is based on voluntary market and competition. As of today, two exchanges have licences in India (i) India Energy Exchange (IEX), which has 97-98% of the market share and (ii) Power Exchange of India (PXIL), who are working but for some reasons have not been able to make a competitive den. So, we have a purpose that two good exchanges should be functioning, however, the volume is a matter of the market. If two good exchanges are functioning than new products will be introduced in the market. In fact, new designs of renewable are coming into the market, but they have a different market requirement. Secondly, distribution companies are feeling the pain of a liquidity crunch. So, there should be a body that can decide on the kind of products should be introduced and cleared. Presence of two healthy and strong exchanges will be beneficial for the end consumers. 

Q: By when the plan will be executed?
A: The initial three shareholders include PTC, Bombay Stock Exchange and ICICI bank. In fact, the network minimum criteria of Rs25 crore has been capitalised and we have applied for a licence at CERC. It, CRC, is trying to study the future of shareholding pattern and we can’t give a timeline to the regulator. On the midway, we are supposed to select the IT that will be used as well as the team and many parallel things, but we will try to keep the process on for the next 2-3 months.

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Q: Kind of business that is expected from the exchange and how it will impact your revenues?
A: PTC, as a standalone, is going to be a shareholder on the platform maybe we have contributed more than 40% in it but will have to bring down the shareholding to 5% by the time license is provided to us. So, the profits that we can have with 5 per cent shareholding will come over the period. 
But, when it comes to volume then this exchange, which has been visualised at our end, and they are able to get new products then PTC as a trader has a volume contribution of around 25-30% in the current exchanges. So, we will like to increase this 25-30% to 40-50%. In fact, we will not be contributing just to PTC exchange but also in the second exchange, whichever is more efficient. Besides, we during our dialogue with the government have a discussion on the ways to increase the short-term market that is stagnant at 10%, in terms of generation, to 15% and then 20%.