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India and Korea Collaborate on Serving Overseas Power Markets

Friday, December 28th, 2012

Power Exchange India Ltd (PXIL) and Korea Power Exchange (KPX) have joined hands to serve the power markets at the national and international level. Both organizations have signed a memo¬randum of understanding to this end that aims to synergise exploring business col¬laboration for strategic initiatives in over-seas power markets. The MoU was signed by PXIL Managing Director and CEO Rupa Devi Singh and KPX Chairman and CEO Ho- Ki Nam. “We are hopeful that this association will help our objective of transforming the In¬dian electricity market. This MoU will bring in a global perspective which will help us to create a benchmark in the areas of op¬erations and product offerings,” said Rupa Devi Singh.

PXIL said that it will work with KPX to share useful information related to a range of areas in power markets including im¬provements of competitive electricity mar¬kets and training employees to enhance their understanding of the electricity mar¬kets. They will also provide guidance re¬lated to the new business initiatives like renewable energy certificates (REC) trading.

“As a neutral entity, KPX has played an important role in developing the electricity market in South Korea. With this MoU in place, it will broaden the area of mutual co-operation between KPX and PXIL,” said KPX Chairman and CEO Ho-Ki Nam. “We hope this collaboration and PXIL’s high perfor¬mance will help us understand the opera¬tions of the Indian electricity market.”

India and Korea are discussing other power projects as well. Kepco (Korea Elec¬tric Power Corp.) is negotiating with GVK group in India for possible acquisition of stakes in the power generation business of GVK Power and Infrastructure Ltd. A senior GVK executive confirmed meet¬ings between Kepco and GVK to Utpal Bhas-kar from The Wall Street Journal. However, the companies have not made any formal announcement and will probably make it official once they reach an agreement.

Kepco has a broad product portfolio that includes nuclear, resource exploration, thermal and renewable generation sectors. It has been eyeing the Indian power sector for a while along with power companies from countries such as France, Germany and Malaysia.

Kepco runs an office in India to man¬age business in the nation as well as in Nepal. Bhaskar points out that GVK Power has 914 megawatts (MW) of power genera¬tion capacity under operation, and around 4,000MW under development. GVK is the largest stakeholder in the Mumbai and Bangalore airports and may sell a stake sale to fund the expansion of its oil and gas business. Kepco is waiting for op¬portunities. presented by GVK that require funds at the moment, according to a May 10th ICICI Securities Ltd report.

ICICI report indicates that GVK Power (GVK) is continuously reporting losses on ac-count of lower PLF (plant load factor) across power projects. It is challenged by factors such as restricted gas availability and ad¬ditional interest costs on account of debt taken for acquisition of stake in Mial (Mum¬bai International Airport Pvt. Ltd) and Bial (Bangalore International Airport Ltd).

“While we highlight that near-term pain (both operating and financially) is likely to remain for GVK for some time, it is looking for PE (private equity) deals at the airport and road division, which is likely to par¬tially allay investors concern over the fund-ing gap across the business verticals,” the report said.

Finally Sahara India Power Corporation Ltd., has also partnered with Korea East- West Power Co. Ltd., a government of Korea undertaking, to set up 6000 MW of power plants through mega projects in India. Both companies will collaborate on tariff-based bidding for Ultra mega Power Projects (UMPPs) and other opportunities in India which will add up to a total capacity of 6000 MW.


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