Gujarat relaxes coal ‘tolling’ norms

By: | Published: June 23, 2018 5:17 AM

Under the tolling mechanism, coal mines allotted to state-owned power plants can be transferred to more efficient private generating units located closer to the mines to reduce generation costs.

Gujarat was the first state to invite tender under the tolling policy in August 2017.

Following feeble responses from private power generators to the state’s invitation for procuring 1,000 MW under the ‘flexible utilisation of coal’ scheme, popularly known as ‘tolling’, Gujarat has extended the deadline for receiving bids under the scheme by two weeks to July 5. It has also relaxed a few bidding norms to ensure higher participation.

According to a senior state electricity board official, who did not wish to be identified, only two companies had participated in the pre-bid meeting called for the tender. Widening the scope of participation, Gujarat has revised the bidding clauses and has allowed power plants to take part in the reverse auction where it is not feasible to transport coal through railways. In such cases, bidders may choose any other suitable mode of coal transportation.

Under the tolling mechanism, coal mines allotted to state-owned power plants can be transferred to more efficient private generating units located closer to the mines to reduce generation costs. Apart from financial savings for electricity distribution companies (discoms), tolling also helps reduce railway congestion – one of the main reasons behind power plants undergoing fuel supply constraints.

To attract more power generators, Gujarat has also said the duration of the 11-month power supply contract may be extended by another year. The earnest money requirement in the form of bank guarantee has been halved to Rs 1.7 lakh per MW of capacity offered. It has also removed the clause which said power suppliers would not be compensated for any rise in freight and transmission charges during the supply period.

Gujarat was the first state to invite tender under the tolling policy in August 2017, after the Centre introduced the scheme in May 2016. The previous tender for 1,000 MW received dismal response, with only GMR Chattisgarh taking part in the bid, that too with an offer to sell only 500 MW of power.

While the ceiling tariff for the reverse auction was kept at Rs 2.82/unit, GMR agreed to sell electricity at Rs 2.81/unit. The ceiling tariff for the reverse auction has been raised to Rs 3.01/unit to reflect higher coal prices and transportation costs in the latest tender.

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