Government permits foreign investment in power trading exchanges

The Cabinet Committee on Economic Affairs (CCEA) has decided to permit foreign investment of up to 49 per cent in power trading exchanges, subject to SEBI and Central Electricity Regulatory Commission regulations and other applicable laws and security norms.

This will be further subject to FDI limit of 26 per cent and FII limit of 23 per cent of the paid-up capital.

FII investments would be permitted under the automatic route and FDI would be permitted under the government approval route. This is subject to the conditions that FII purchases will be restricted to secondary market only, and no non-resident investor, including persons acting in concert, holding more than 5 per cent of the equity in these companies.

The approval is expected to strengthen power trading exchanges and enhance the availability of power, as well as improve its distribution for inclusive development, an official release said.

As per extant policy, FDI, up to 100 per cent under the automatic route is permitted in the power sector (except atomic energy). This includes generation, transmission and distribution of electricity as well as power trading, subject to the provisions of the Electricity Act, 2003.

The extant FDI policy permits foreign investment, up to 49 per cent foreign investment [FDI limit of 26 per cent and an FII limit of 23 per cent of the paid-up capital], in infrastructure companies in securities markets, namely, stock exchanges, depositories and clearing corporations, in compliance with SEBI Regulations.