Short-term power to be cheaper by 13 per cent under reverse e-auction: Icra

By: |
New Delhi | Published: April 27, 2016 5:47:46 AM

Icra (Investment Information Credit Rating Agency) said procurement through such mode would result in a competitive price discovery in a more transparent manner.

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.

Do you know What is Revenue Deficit, Centrally Sponsored Scheme, Non Tax Revenue, Non Debt Capital Receipts, Consolidated Fund of India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Next Stories
1India not to succumb to any pressure on IPR issues: Nirmala Sitharaman
2Indian private defence industry divided over strategic partnership
3Even Africa’s Burundi beats India on health spend by govt