Pilot scheme to buy 2,500 Mw power sans PPAs

Stranded power generating companies will now be able to sell power through a special scheme as the Union government on Monday allowed procurement of power for three years from generators that have commissioned projects but have no power purchase agreements (PPAs).

The central government on Monday launched a pilot scheme for procurement of 2,500 Mw on a competitive basis for three years from generators with commissioned projects but without PPAs.

Coming within days of a government announcement that all villages in the country have been electrified, the new mechanism is likely to bolster power supply. It, however, will be inadequate in the first phase since procurement is planned for just 2,500 Mw against stranded projects of 15,600 Mw that do not have PPAs.

The Union power ministry issued guidelines for the scheme on April 10. PFC Consulting Limited, a wholly owned subsidiary of PFC Ltd, has been appointed as the nodal agency and PTC India Limited as the aggregator.

PTC India would sign a three-year agreement for procurement of power with successful bidders and power supply agreements with the distribution companies, an official statement said.

Under the scheme, a single entity can be allotted a maximum capacity of 600 Mw. The scheme promises a minimum offtake of 55 per cent of the contracted capacity. The tariff will be fixed for three years without any escalation.

PFC Consulting will start inviting bids from this week and bidding will be conducted on the DEEP (Discovery of Efficient Electricity Price) ebidding portal. It is expected this scheme will help revive power demand.

Many power projects were stranded due to low availability of coal supply, lack of longterm PPAs, regulatory hurdles, and delays in receivables from distribution companies. Of 80,000 Mw stressed power assets, more than 20,000 Mw, with an investment of about ~1 trillion, are operating with long-term PPAs and necessary fuel supply agreements.

More than 15,600 MW of operational coal-based power plants have been classified as stressed due to lack of PPAs. Research firm ICRA recently noted that only 7,600 MW of bids for longterm power procurement have been invited by discoms in Andhra Pradesh, Kerala, Telangana and Uttar Pradesh over the last four years. Of this, PPAs have been signed only for 1,400 Mw by Kerala and Telangana.