Indian consumers would save as much as R1.46 lakh crore on their annual electricity bills if all power projects in the country can reduce their tariffs to as low as that of Reliance Power?s Sasan ultra mega power project, a back-of-the-envelope calculation by FE showed.
Reliance Power will supply electricity from the project at R1.19 per unit even as Indian discoms? cost of pooled power purchase rules at R3 a unit.
Sasan, India?s largest coal-fired pithead power project, was awarded to the private developer through tariff bidding route. Even the policy makers who drafted the ultra mega power project (UMPP) scheme had not expected such an aggressive response from bidders. ?I was expecting the lowest tariff to be around R1.5 a unit,? RV Shahi, the former Union power secretary who played a leading role in the formulation of the UMPP scheme, told FE.
Since the escalation component in the fuel cost quoted by the developer is less than 1%, the scope of tariff revision is quite limited. India consumed about 811 billion units of electricity during the financial year 2010-11.
So, what led bidders to quote such aggressive offers? ?Actually, there is a lot of scope for optimising coal production cost in India, given the inefficient mining. Some bidders were able to see that and benefited,? Shahi explained.
In an internal study, the central electricity regulatory commission has found that levelised tariff for projects awarded through competitive bidding route is much lower compared to power plants developed under the cost-plus system, which was finally phased out in January.
?The bidder is under pressure to quote a major part of its tariff as a non-escalable component to bag the project, which reduces the scope of tariff increase in future and to the extent insulates consumers from increase in power supply costs,? CERC chairman Pramod Deo said.
Reliance Power expects to start generation from the proposed plant by January 2013 by commissioning the first unit. The full capacity will be commissioned by 2014. The proposed plant will get assured fuel supply from the nearby Moher and Moher Almohri captive coal mines.
?Construction work at the Sasan site is progressing well and we will commission the coal mine and power plant ahead of schedule,? JP Chalasani, chief executive officer, Reliance Power, told FE.
States like Madhya Pradesh, Uttar Pradesh, Punjab, Delhi and Haryana which have been allocated power from the project are also expected to feel easing of financial burden on account of power purchase when they get electricity supply from the project. For example, Madhya Pradesh, which has been allocated 1,500 mw from the project, will save about R15 crore a day when it gets full power from the project.