Govt allows electricity derivatives, forward contracts

Electricity will now be traded as other commodities with forward contracts and derivatives on exchanges as the government issued an order permitting this, a move experts say can transform power contracting in India.
The power ministry issued the order on July 10 after consulting the Solicitor General on a decade-long jurisdictional spat between power regulator Central Electricity Regulatory Commission (CERC) and the Securities & Exchange Board of India (Sebi). The two regulators had earlier agreed to mutually settle the issue. The order is subject to a verdict by the Supreme Court that will hear the matter on August 28.
Sources said delivery-based long-term contracts are likely to be traded on power exchanges under CERC’s jurisdiction, while the derivative contracts are likely to be traded on commodity exchanges under Sebi.

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