News

NSE's Power Exchange India to shut down soon

Tarun Sharma Moneycontrol Power Exchange India (PXIL), the bourse promoted by NSE and NCDEX, will soon shut down. According to a source in the know, the 10-member NSE Board took the decision to shut down the exchange in its meeting convened on the last week of January. The Board feels that it is not viable to run the power exchange with less than 5 percent share in a market which is dominated by its more nimble rival India Energy Exchange (IEX). To be sure, Power Exchange, which began life in 2008, has been crippled not only by diminishing market share, but also heavy losses. The bourse, which allows discoms and power companies to trade on its platform, is believed to be making an operational loss of Rs 35 lakh every month. The daily volumes turnover on Power Exchange is around 5000 MW against IEX’s over 1 lakh MW. The above-quoted source further added that after failing to break even the bourse has decided to log out of business. The exchange could perhaps be faulted for not being competitive enough. Its approach from the beginning was not right, says a market expert who spoke on condition of anonymity.  The source further added that PXIL was not aggressive as compared to IEX. “IEX invested heavily on the infrastructure of exchange. IEX invested Rs 40 to Rs 50 crores in 2008 when required to put money in the exchange.” Regulatory overhang was cited as another reason why PXIL couldn’t get its act together. After securing regulator Central Electricity Regulatory Commission’s nod, the exchange still needs approvals from the state to allow companies wishing to trade on the bourse. Such approvals from the state were often not forthcoming, added the source. “These is a lack of demand in power trade and requires lots of approval for taking on companies especially from state government,” thesource said.