PTC to roll out second round of power purchase

At a time when demand concerns have dogged the power sector, Power Trading Corporation (PTC) is playing the role of an aggregator and has successfully completed bidding for 1,900 Mw of short-term power contracts. Simultaneously, it is looking for a second tranche of power procurement and is planning to go the whole hog into trading through power exchange in tie-up with ICICI and BSE.

TN, Telangana, Haryana, Punjab, Jharkhand and Bihar are likely to sign the power sales agreement (PSA) for the first tranche of 1,900 Mw, for which PTC has aggregated bids. “Through the use of scheduling, we will able to cater to the demand of the state without the power plant suffering. Within a month, the final PSA should be signed,” PTC Chairman and MD Deepak Amitabh said in an interview with Business Standard. The pact would be for three years with a composite charge and just 1 paise fixed charge in the tariff. At 55 per cent plant load factor (PLF), states would be buying power at ~4.24 a kilowatt an hour (unit), said Amitabh.

Further, every 5 per cent increase in PLF would get a 1 per cent discount in tariff under the agreement. In case PLF goes below 55 per cent, the differential power would be sold in the open market and any under-recovery would be charged to the distribution company. If power is sold at a premium, the profit would be divided equally between discom and the generating firm. The arrangement would be different from the normal power purchase pact under which a discom pays fixed charge even if it does not draw the contracted power.

Power under this mechanism would be mostly from stressed power assets belonging to RKM PowerGen, Jaiprakash Associates, IL&FS and MB Power. With the fate of these assets hanging and there being high chances of them landing in insolvency tribunal, there is a question mark on signing of contracts.

Amitabh, however, said sale of plants under insolvency should not be an issue. “I don’t see any difficulty in signing. If an exemption is required, we will ask the government,” he said. According to him, the fact was that no financial closure for coal-based power plant has taken place in the last threefour years though coal continued to be important as base load. “Over a period of time, as new refineries and other industry come up, demand will grow.” For the volume of second tranche, he said 2,0003,000 Mw is the sweet spot where there is always a demand.