The power ministry has issued amended tariff policy to promote private sector investment in the hydro power generation. As per the revised tariff policy, long-term power purchase agreement (PPA) would be at least for 60% of the total saleable design energy.
However, this 60% would get enhanced by 5% for delay of every six months in commissioning of the last unit of the project against the scheduled date approved by the Appropriate Commission before commencement of the construction.
The total saleable design energy would be arrived at by deducting the following from the design energy at the bust bar :13% of free power (12% for the host government and 1% for contribution towards local area development fund as constituted by the state government), energy corresponding to 100 units of electricity to be provided free of cost every month to every project affected family notified by the state government to be offered through the concerned distribution licensee in the designated resettlement area/projects area for a period of 10 years from the date of commissioning.
Informed sources told FE that hydro power project in the private sector would have the option of getting the tariff determined by the appropriate commission on the basis of performance based cost of service regulations.
However, appropriate commission would determine tariff if it is satisfied that the project site has been allotted to the developer by the concerned state government after following a transparent two state process.
The first stage should be for prequalification on the basis of criteria such as financial strength as measured by networth, past experience of developing infrastructure projects of similar size, past track record of developing projects on time and within estimated costs turnover and ability to meet performance guarantee.
Moreover, the in the second stage, bids are to be called on the basis of only one single quantifiable parameter, such as, free power in excess of 13%, equity participation offered to the state government, or upfront payment.