In a major policy shift, the power ministry has proposed tariff-based bidding for 60% stake sale in hydro power projects and 85% for thermal projects. In the revised mega power policy, the ministry has argued in favour of relaxation in international competitive bidding process for such tariff-based bidding projects and proposes easing of the mandatory requirement clause for privatisation of distribution in power-purchasing states. Merchant power plants (MPPs) and captive power plants (CPPs) will be covered under mega status subject to MPPs supplying at least 60% power on short-term sale through power exchange and CPPs excess generation being sold through power purchase agreements/power exchange.
The policy envisages that the mandatory requirement of interstate sale of power should be dropped. The constitution of regulatory commissions should not be a pre-requisite for the grant of mega status to the power project.
Sources told FE that tying up entire power through purchase agreements and getting approval by the regulatory commissions cannot be insisted for mega power status keeping in mind that the tariff-based bidding process factors in the mega status to arrive at competitive price bids. The developer should submit a bond pledging to sign purchase agreements with the approval of state power regulators prior to the project?s commissioning.
In case of non-adherence, developers would be liable to supply 10% of power free of cost to the Centre /nominees until the financial concessions granted to the developer are recovered with applicable interest. A similar bond is envisaged for CPPs and MPPs regarding the sale of the requisite quantum of power.
On removal of the clause, the ministry of heavy industries (MHI) argued that no deemed export benefit to be allowed to the developer who is going through tariff-based bidding and sourcing the equipments domestically without international competitive bidding. The department of revenue observed that the international competitive biddings may be removed, subject to condition that IPP?s purchasing machines domestically should have certification from the Central Electricity Authority. The department of economic affairs proposed that either sale of power should be through competition or procurement of equipments through international competitive bidding.