Tata Power Trading Company Ltd, the trading arm of Tata Power, is set to bag a power trading licence.

The company, established with a paid up capital of around Rs 2 crore (Rs 20 million), has cleared the technical and financial parameters requirements prescribed by the Central Electricity Regulatory Commission.

The regulator was expected to come out with the final set of public notices inviting objections to the utility's application, government sources said.

Tata Power Trading's application is among the three taken up by the CERC for hearing. The utility, which has applied for a countrywide trading licence, is slated to kick off operations by May this year.

Tata Power Trading Company was expected to start operations by selling the surplus generation by its parent company -- Tata Power Company Ltd -- to power deficient states like Delhi, Haryana, Punjab and Uttar Pradesh, company officials said.

Taking advantage of the open access provisions in the new Electricity Act 2003, the trading firm is also expected to source about 450 Megawatt of power for its distribution utility in Delhi from outside the state.

North Delhi Power Company Ltd, which gets power solely from Delhi Transco Ltd, will now source from a 330 Mw hydel plant in Uttaranchal and around 100 Mw more from a greenfield thermal project coming up in the east coast.

The CERC had earlier turned down Tata Power's application for a trading licence on technical grounds. It had asked Tata Power, which had applied for a trading licence prior to the setting up of its trading subsidiary, to form a trading utility first.

About ten players, including the National Thermal Power Corporation, Reliance Energy, the Adani group, the Essar group, Koyela Energy and Amalgamated TransPower Ltd, have also applied to the CERC for trading licences.

The CERC has so far conducted hearings on three of these cases, including Tata Power Trading and Reliance Energy's trading arm.