The state-owned power distribution companies (discoms) can save up to 50-60 paise per unit of electricity procured under short-term contracts through reverse e-auction, as mandated by the central government last month. However, given that the average mix of short-term power for discoms is only 11%, the actual benefit to the consumers would be 4-5 paise per unit or 0.8%, Icra has said in its report.
Until now, discoms could enter into bilateral contracts for short-term power (for a period of up to a year) either through cost-plus mechanism or the bidding route. However, with the government notification in March, all such transactions will take place on an electronic platform via reverse e-auction from April 1.
Icra (Investment Information Credit Rating Agency) said procurement through such mode would result in a competitive price discovery in a more transparent manner.
The new method will bring relief to the debt-laden discoms and their consumers, but it could squeeze the power developers’ margin, according to Icra.