Concept of deemed availability and minimum fuel stock for 10 days should be done away with, says CERC
The Central Electricity Regulatory Commission (CERC) has advised the power ministry to revise the standard bidding document (SBD) for ultra mega power projects (UMPPs) and design these based on a build-own-operate (BOO) model instead of a design, build, finance, operate and transfer (DBFOT) model.
It says the concept of deemed availability and minimum fuel stock for 10 days should be done away with. The ministry should engage with the coal ministry to ensure full coal supply. In the event of Coal India Ltd, the government-run monopolist, not being able to supply from its own mines, it should import, blend and supply coal to the generator. The cost of blended coal should be allowed as a pass-through.
CERC’s advice comes in the wake of several objections by bankers and industry bodies such as CII, Ficci, Assocham and the Association of Power Producers against the model PPA drafted by the power ministry. They had unanimously argued it was not a bankable one and did not address the issues that had arisen in the wake of the revised regulations imposed by coal producing countries such as Indonesia.
CERC chairman Pramod Deo told Business Standard: “The draft model PPA (power purchase agreement) has been examined by CERC, and it is felt the document needs refinement to adequately address various issues around competitive procurment of power by the distribution licensees. The nomenclature of a model SBD as a public-private partnership is not appropriate, as it is premised on the assumption the distribution licensee will be a public entity and the generator will be a private entity. However, there may be a situation when some government distribution licensees may also get privatised under the provisions of the Electricity Act, 2003.”
CERC says normative availability should be fixed after factoring in the need for reasonable plant outage and any generation beyond this should be paid for by the beneficiary only at the rate of energy charge. There should not be any provision for incentive beyond normative availability. It says the provision of an independent engineer should be dispensed with. Ideally, both contracting parties should be involved in measuring and monitoring a project.
It has suggested the gross calorific value (GCV) as certified by the supplier be used for the purpose of payment of energy charge and it should be the responsibility of the bidder to ensure it gets coal of the desired quality and GCV from the supplier. In captive mines, computation of the GCV could be undertaken through joint sampling by both beneficiary and bidder.
Besides, CERC has said, a utility should not be subjected to penalties for failure to obtain the required statutory clearances. On the SBD provision relating to single variable bidding and station heat rate, CERC said the provision of payment of energy charges on actual station heat rate measured prior to the operation date is fraught with avoidable complexities.
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