Fresh Auc­tions for Power Pacts Likely Soon

The Economic Times - - Economy: Macro, Micro & More - [email protected] times­group.com

New Delhi: The gov­ern­ment is likely to launch a fresh round of auc­tion of power pur­chase con­tracts while also al­low­ing es­ca­la­tion and fixed charges to power com­pa­nies in a bid to al­le­vi­ate stress in the sec­tor.

Ahead of polls and set­ting in of sum­mer de­mand, the auc­tions will help stranded and un­der­utilised power plants sign agree­ments with state dis­tri­bu­tion util­i­ties for three years. There are 14,000-mw stranded and un­der­utilised power units, of which close to 8,000-mw have coal sup­plies but no power pur­chase agree­ments. These in­clude plants of com­pa­nies like Sem­b­corp En­ergy In­dia, SKS Is­pat & Power, Lanco In­frat­ech and Meenakshi En­ergy.

Re­cent ten­ders by dis­coms seek­ing short-term power sup­ply have re­ceived high bids as gen­er­a­tors ex­pect coal short­age, higher de­mand for elec­tric­ity from states due to sum­mers and elec­tions. Bids floated by state util­i­ties of Ch­hat­tis­garh and Ut­tar Pradesh for sup­ply in May – June re­ceived bids as high as Rs 5 per unitRs 6.5 per unit

The sec­ond round of PPA auc­tions is pro­posed to be in line with the pi­lot bids but with cer­tain re­lax­ations to the power ge- ner­a­tors. “The pro­posal is to align the scheme with the ex­ist­ing medium term power pro­cure­ment agree­ments. This will ad­dress the de­vel­op­ers’ con­cerns of fixed tar­iff for three years and the fixed costs is­sue,” said the of­fi­cial. The power and the coal min­istries are also work­ing on the rec­om­men­da­tions of an em­pow­ered com­mit­tee headed by Cab­i­net Sec­re­tary P K Sinha ask­ing them to auc­tion PPAs along with pre-de­ter­mined coal sup­plies, the of­fi­cial said.

The gov­ern­ment had in April last year kicked-off the pi­lot scheme for pro­cure­ment of ag­gre­gate power of 2,500-mw on com­pet­i­tive ba­sis for three years from com­mis­sioned projects with­out PPAs. PFC Con­sult­ing Lim­ited acted as the nodal agency and PTC In­dia was the PPA ag­gre­ga­tor for the scheme.

The scheme as­sured min­i­mum off-take of 55% of con­tracted ca­pac­ity to the power plants but the tar­iff has been fixed for three years with­out any es­ca­la­tion. Also the fixed cost for the PPA auc­tion has been kept at 1 paisa per unit.

In the first round of auc­tions, seven plants won1900-mw power con­tracts. These in­clude RKM Pow­er­gen, Jhabua Power Ltd, MB Power Ltd, SKS Power, Jin­dal In­dia Ther­mal Power Ltd, IL&FS En­ergy and JP Ni­grie. Elec­tric­ity dis­tri­bu­tion com­pa­nies of Te­lan­gana, Tamil Nadu, West Ben­gal, Bi­har and Haryana have agreed to pro­cure the power.

The scheme was kicked off to ad­dress the is­sues of stressed power as­sets. Lack of PPAs is one of the key rea­sons for stress in the power sec­tor be­sides other fac­tors such as pro­mot­ers’ eq­uity crunch, no coal sup­ply, and reg­u­la­tory and con­trac­tual is­sues. Elec­tric­ity dis­tri­bu­tion com­pa­nies have not called enough medium and longterm con­tracts in the last few years.

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