In the matter of the CERC (Procedure, Terms and Conditions for grant of trading license and other related matters), Regulations for grant of an interstate trading licence – EQ
Summary:
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#### Key Details:
– **Petitioner:** K.P. Energy Limited (KPEL), Surat, Gujarat.
– **Regulatory Authority:** Central Electricity Regulatory Commission (CERC), New Delhi.
– **Date of Order:** 23rd February 2026.
– **Licence Type:** Category ‘V’ (Inter-State Trading Licence).
– **Geographical Scope:** Whole of India.
#### Regulatory Framework & Compliance Process:
The application was processed under the **Electricity Act, 2003** and the **CERC (Trading Licence) Regulations, 2020**. The approval followed a multi-stage statutory process to ensure transparency and compliance:
1. **Public Notice by Applicant (Dec 2025):** KPEL published notices in multiple newspapers across various Indian states (including Business Standard and Financial Express) to invite objections. **No objections were received.**
2. **Prima Facie Review (Jan 2026):** CERC reviewed KPEL’s application and financials, concluding that the company *prima facie* met the qualifications for a Category ‘V’ licence.
3. **Commission’s Public Notice (Feb 2026):** CERC issued its own public notice (in Hindustan Times and Amar Ujala) inviting further suggestions or objections. **No responses were received.**
4. **Final Hearing (Feb 2026):** The counsel for KPEL confirmed compliance and the absence of any objections, leading to the final grant of the licence.
#### Eligibility & Qualifications Met (As per Regulations):
To qualify for a Category ‘V’ trading licence, KPEL had to demonstrate the following, which were verified by the Commission:
| Requirement | KPEL’s Compliance |
| :— | :— |
| **Net Worth** | Minimum of **Rs. 2 Crores** required. Met as per Audited Balance Sheet dated 31.08.2025. |
| **Liquidity Ratio** | Minimum current & liquidity ratio of **1:1** required. Met as per Audited Balance Sheet. |
| **Qualified Professionals** | At least one full-time professional with relevant experience. KPEL has two: a Director with 30 years in wind power tech, and a CFO with 27 years in finance. |
| **Business Scope (MoA)** | Authorisation to engage in electricity trading in its Memorandum of Association (MoA). |
| **Conflict of Interest** | KPEL is authorized for transmission but submitted an affidavit **not to engage in transmission** while holding the trading licence. |
#### Key Terms & Conditions of the Licence:
The licence is granted for a period of **25 years** and is subject to strict, ongoing compliance. Key conditions include:
– **Exclusivity of Business:** The licensee **shall not engage in the business of transmission** of electricity during the subsistence of this trading licence.
– **Trading Margin:** Must charge trading margins strictly in accordance with CERC regulations.
– **Financial Discipline:** Must maintain the prescribed net worth and liquidity ratio (1:1) at all times.
– **Reporting & Fees:** Must submit required reports to CERC and pay the annual licence fee regularly.
– **Performance Obligation:** If the licensee **fails to undertake any trading activity within one year**, the licence is liable for revocation.
– **Revocation:** Non-compliance with the Act, Rules, or Regulations can lead to the licence being revoked.
#### Business Implications for K.P. Energy Limited:
1. **Market Expansion:** This licence allows KPEL to officially enter the **inter-state power trading market**, enabling it to buy power from generators in surplus states and sell it to distribution companies (Discoms) or open access consumers in deficit states across India.
2. **Revenue Diversification:** KPEL, previously focused on wind power generation and project development (as implied by its experience), can now diversify into the lucrative power trading business, creating a new revenue stream.
3. **Strategic Growth:** The licence positions KPEL as a comprehensive energy player, capable of not just generating power but also optimizing its value through trading.
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