Comments
Those bidding for ultra-mega power projects will now have to source equipment from domestic manufacturers. They will also have to offer the most competitive rates based on overall plant efficiency.
This was decided by an Empowered Group of Ministers (eGoM) headed by Defence Minister A. K. Antony, which gave its go-ahead for the latest standard bidding documents.
The move to make it mandatory to source equipment from domestic manufacturers is bound to help companies such as BHEL, L&T and Bharat Forge-Alstom, all of which are suffering from lack of fresh orders. The Minister of Heavy Industries and Public Enterprises, Praful Patel, has been asking the Government to make it mandatory for UMPPs to source equipment locally. The two UMPPs — Tata Power at Mundra and Reliance Power at Sasan — use imported equipment.
The eGoM also decided that any increase in the fuel cost would be passed on to the consumer.
The only operational UMPP, of Tata Power at Mundra, has been reporting losses because of increase in the prices of imported coal. Reliance Power has approached the Central Electricity Regulatory Commission for a hike in tariff for its Sasan project.
The new standard bidding documents wilould be applicable for projects where the fuel source is determined in advance, known as case-II. This would facilitate award of 4,000 MW each UMPPs in Tamil Nadu and Odisha. “There are many clauses that would be fruitful (to power developers), such as pass through of fuel cost,” said Jyotiraditya M Scindia, Minister of State for Power.
But Ashok Khurana, Director General of the Association of Power Producers, which represents private power developers, had some concerns. “Looking at the current status of the power sector, where many companies have reported losses, the new norms should have dealt with risk allocation in an equitable manner. But, the document is rigid. I doubt if it will be able to generate competition,” he said.
The Government has introduced several changes in the new bidding norms, such as a single parameter for competition, or ‘capacity charge.’
In other words, this is moving away from the current levelised tariff structure that was a combination of efficiency and fuel cost. Now, there will be a single bid on capacity charge, which means fixed cost for every unit of electricity generated.
Earlier model
In the earlier model, a bidder had to give nearly 54 price quotes spread over 25 years — separate bids for capacity and fuel cost, among others. Since the fuel cost has been made pass-through now, there will be no quotes for it. The capacity charge has now been linked to depreciation and loan repayment as well as the inflation index. The UMPPs will have to sell at least 80 per cent of the electricity produced on long-term agreement to distribution companies, and retain the balance for merchant sales.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.