In the matter of CERC (Procedure, Terms and Conditions for grant of trading license and other related matters), Regulations for the grant of an inter-State trading licence – EQ
Summary:
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**1. Parties Involved**
– **Petitioner:** KPI Green Energy Limited, a company incorporated under the Companies Act, 2013, with its registered office in Surat, Gujarat.
– **Authority:** Central Electricity Regulatory Commission (CERC), New Delhi.
**2. Subject of the Petition**
The petitioner applied for a **Category ‘IV’ inter-State trading licence** under Section 14 of the Electricity Act, 2003, read with the relevant Trading Licence Regulations (2020). This licence permits the company to buy and sell electricity across state borders.
**3. Regulatory Compliance Check**
The CERC verified that the petitioner met all statutory requirements:
– **Public Notice:** Notices were published in multiple editions of “Business Standard” and “The Financial Express” on December 6, 2025, to invite public objections. **No objections were received.**
– **Financial Health (Net Worth):** As per the audited balance sheet dated August 31, 2025, the company demonstrated a net worth of **₹10 Crore** and a minimum current ratio of 1:1, fulfilling the criteria for a Category ‘IV’ licence.
– **Professional Expertise:** The company confirmed the employment of full-time professionals with the requisite experience in power systems, finance, and management, as required by the regulations (e.g., Group CEO, CFO, COO).
– **Business Scope:** The Memorandum of Association (MoA) authorizes the company to engage in electricity transmission/trading. The petitioner provided an undertaking that it **will not engage in the transmission business** concurrently with trading activities.
**4. Commission’s Findings & Decision**
– The CERC, in a preliminary order dated January 15, 2026, found the petitioner *prima facie* qualified.
– After confirming that no further suggestions or objections were received following the public notice, the CERC formally decided to **grant the Category ‘IV’ inter-State trading licence** to KPI Green Energy Limited.
**5. Key Conditions Attached to the Licence**
The licence is granted for a period of **25 years** and is subject to strict compliance with the following conditions throughout its validity:
– **Regulatory Compliance:** Must adhere to the Electricity Act, 2003, CERC rules and regulations, and any orders/directions issued from time to time.
– **Business Restriction:** The licensee is explicitly barred from engaging in the business of **transmission of electricity** while holding this trading licence.
– **Trading Margin:** Must charge trading margins strictly as per the prevailing CERC Trading Licence Regulations (currently capped under specific conditions).
– **Financial Discipline:** Must maintain the prescribed net worth (₹10 Crore) and current & liquidity ratio (1:1) at all times.
– **Annual Fee:** Must regularly pay the annual licence fee as per CERC (Payment of Fees) Regulations, 2012.
– **Reporting:** Must submit all required reports and information to the Commission.
– **”Use it or Lose it”:** If the licensee fails to undertake any trading activity within **one year** from the date of the licence grant, the licence is liable for revocation.
– **Revocation:** Non-compliance with any of the above conditions makes the licence liable for revocation.
**6. Business Implication**
With this order, KPI Green Energy Limited is formally authorized to operate as an inter-state electricity trader. This allows the company to expand its business model beyond power generation (renewable energy) into the trading of power, providing a new revenue stream and the ability to optimize power purchase and sale portfolios across India.
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