In an attempt to bring some relief to the stressed thermal power sector, the government has introduced a pilot scheme to procure electricity from power plants without PPAs. A combined capacity of 2,500 megawatt (MW) will be procured through this scheme.
Though no time line for inviting tenders has been announced, the power ministry said PTC India would sign three-year (mid-term) power purchase agreements (PPAs) with successful bidders and contract with power distribution companies (discoms) to sell electricity.
The pilot plan proposes that a single entity, which quotes or matches the lowest bid in the auction, would be allocated a maximum capacity of 600 MW. A company cannot quote part capacity from different power stations in the same bid. If PTC procures power less than 55% of contracted capacity in a month, the power plant would be paid a compensation, whose quantum would be linked to spot power prices at the Indian Energy Exchange.
The competitive bidding for the pilot scheme would be conducted by PFC Consulting, a subsidiary of the Power Finance Corporation. PFC Consulting had signed a memorandum of understanding (MoU) with PTC India in January for exploring power procurement opportunities from coal-based power plants.
But, the capacity and scope of procurement were not announced then.
Tepid rise in growth in power demand, coupled by rampant capacity addition, has resulted in power plants running at low utilisation rates, making it difficult for a lot of them to regularly service debts and raising the risk of them turning into non-performing assets.
More than 15.6 gigawatt (GW) of operational coal-based power plants have been classified as stressed assets due to the lack of PPAs. Research firm ICRA recently noted that only 7.6 GW of bids for long-term power procurement have been invited by discoms in Andhra Pradesh, Kerala, Telangana and Uttar Pradesh over the past four years. Of this, PPAs have been signed only for 1.4 GW by Kerala and Telangana.