Gujarat’s tender gets dismal response

By: | Published: October 14, 2017 5:14 AM

Participation by just one company, but to sell only 500 MW.

Power supply, GujaratThe state is awaiting the approval of the Gujarat Electricity Regulatory Commission to complete the deal.

Gujarat’s tender to buy 1,000 MW of coal-based electricity received dismal response with only one company participating in the bid, that too with an offer to sell only 500 MW of power. State electricity department officials told FE that GMR Chattisgarh offered to sell power to the state under the ‘flexible utilisation of coal’ scheme. 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 state is now awaiting the approval of the Gujarat Electricity Regulatory Commission to complete the deal.

Only five parties had participated in the pre-bid meeting for the auctions which was deferred multiple times expecting larger involvement from the industry. Industry sources say that enough bidders were not interested due to unfriendly terms and conditions, especially against the backdrop of low ceiling tariff. The tender document had no assurance on stability of coal prices and no offtake guarantee, which means that the state can stop procuring power any time it wants.

Contrary to regular PPA norms, there is not compensation mechanism provided for power not dispatched, sources added. Uncertainty of coal supply by the railways were also not covered under ‘force majeure’, raising the risks of investment.

According to Ashok Khurana, director-general of Association of Power Producers, “risk apportionment (in the proposal document) was inequitable and loaded against suppliers”.
The tender under the ‘flexible utilisation of coal’ scheme, popularly known as ‘tolling’, were invited in August — the first of its kind after the Centre introduced the scheme in May 2016 to bring some respite to 28,000 MW of thermal power plants without regular fuel supply arrangements with Coal India. Under the mechanism, Gujarat will transfer the coal allocated to power generating stations owned by Gujarat State Electricity Corporation (GSECL) to more fuel-efficient private plants.

Coal-powered GSECL plants’ power-sale price range between Rs 2.92-5.42/unit. GSECL has allocation from Korba coalfield in Chhattisgarh and Korea Rewa coal field in Madhya Pradesh in ratio of 80:20.

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