The Power Ministry will finalise the Standard Bidding Document (SBD) for power projects to be set up under 12th Five-Year Plan on Thursday.
“The new bidding norms would be simpler than the previous one. It will have components of fixed charge and single-variable cost,” said a senior Power Ministry official.
Finalisation of the bidding norms would pave the way for setting up of two new ultra mega power projects – Cheyyur in Tamil Nadu and Sarguja in Chhattisgarh.
The fixed charge would determine the actual efficiency of the bidder to convert fuel into electricity, whereas the variable cost would be linked to indices such as rise in fuel cost and inflation, among others.
This means any rise in price of coal or natural gas used to fire the power plant would be passed on to the end-consumer. This would prevent cases such as Tata Power’s imported coal-based Mundra Ultra Mega Power Project.
The change in laws in Indonesia, from where the unit sources coal, has increased price of the fuel. This has resulted in higher electricity production cost, which has to be absorbed by the producer and cannot be passed through completely to consumers.
In the previous bidding documents, there were two broad elements – energy charge and capacity cost. Energy charge would mean fuel cost that may be coal or gas, while capacity cost includes operation and maintenance, depreciation and interest costs. All these elements are again classified into those whose cost can escalate and others where no cost escalation is allowed.