The point to be evaluated is what is the quantum of risk the promoters are taking. Essar Power's 515mw naphtha-based unit started generating power even before a PPA was signed and without any counter- guarantee. Its receivables are not guaranteed by the state government either. When most of the project is financed by Indian financial institutions and dues are guaranteed, what is it that foreign developers offer to the country? In any case, BHEL hasshown itself perfectly capable of bagging several contracts on an international competitive-bidding basis. If Essar can put up a naphtha-based plant and operate at 80 per cent PLF without any guarantees, there is little reason for developers who have global experience to need all the sops that are being demanded. The heat rate of the coal-fired Dahanu unit of BSES is 2,336 Kcal/Kwh. Again, it is difficult to understand why a higher heat rate of 2,449, which means a higher fuel consumption, should be allowed for IPPs.

Instead of pampering developers with counter-guarantees, refurbishing of existing plants would be a better option. The joint venture between BHEL and Siemens has already bagged the orders to refurbish at least 17 units. Not only is the option cheaper, it saves substantial time as well.