Markets: Eerie calm

Markets: Eerie calm

it is not clear when market sentiment can change; as in the past, it can be quite sudden.
At a turn and yet not

At a turn and yet not

RBI could be tempted to cut policy rate to support growth at its bi-monthly review.

New bidding rules won't inspire investors: Tata Power, Reliance Power

Aug 09 2013, 14:54 IST
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New bidding rules won't inspire investors: Tata Power, Reliance Power New bidding rules won't inspire investors: Tata Power, Reliance Power
SummaryTata and Reliance asked power minister Jyotiraditya Scindia to continue with current SBDs.

The country’s two leading power producers have told the government that its revised bidding parameters for ultra mega power projects (UMPPs) are out of tune with the present market realities and it would not inspire investor confidence.

Tata Power and Anil Ambani-promoted Reliance Power have asked power minister Jyotiraditya Scindia to continue with the current SBDs (standard bidding documents) before proceeding to seek the approval of an empowered group of ministers (EGoM) to implement the draft SBDs.

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In separate representations to Scindia, the two power companies have opposed changes in the draft SBDs prepared for the EGoM. Rather, the current SBDs have helped electricity producers to contractually conclude about 40,000 MW in a short time. The EGoM headed by defence minister AK Antony is all set to consider the suggested changes in SBDs.

Both the companies have squarely opposed changes in the model power purchase agreement linking coal supply to the average prices of Coal India, based on its basket of mines.

In his letter to Scindia on July 31, Tata Power MD Anil Sardana argued that the MPPA attached with the SBD says that a power purchase agreement can be terminated even if the power plant cannot operate due to payment default by the procurer, an event which can be triggered by any procurer any day.

“This makes the business proposition very unpredictable and one-sided, which would surely impede investments and the sector’s growth prospects,” Sardana argued.

R-Power CEO JP Chalasani argued that considering that the developer might be dealing with multiple procurers, “there is high potential of such draconian provisions being used for mischief. This makes the business proposition unpredictable and lopsided.”

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