Private power companies express concerns over bidding norms

Association of Power Producers have requested the govt to modify bid documents to address the concerns of fuel availability and price risk

Private power producers including Reliance, Tata, and Jindal have written to Power Minister Piyush Goyal expressing concerns over the bidding norms.

The Association of Power Producers, representing 20 private generators, have requested the government to modify bid documents to address the concerns of fuel availability and price risk as well as worries of the lenders with regard to the model of setting up the UMPPs.

Bankers and financial institutions have expressed concerns with respect to DBFOT (Design, Build, Finance, Operate, Transfer) structure of setting up UMPPs.

"DBFOT requires the developers to bring in finance, technology and a host of other inputs, but thereafter relegates the developer to the status of a BOT (Build, Operate, Transfer) contractor," APP Director General Ashok Khurana said in the letter.

APP said the electricity regulator CERC has also opposed the DBFOT model.

Central Electricity Regulatory Commission had said that the DBFOT model is suited more for natural monopoly business like road, transport, transmission and distribution of electricity and not for delicensed businesses like generation.

CERC said this model may create uncertainty in terms of financing because of unsecured nature of assets in the absence of clear ownership with the bidder.

APP also said that the effective pass-through mechanism of the fuel price risk should be addressed.

The association said that some of the many concerns which the government should address are the "absence of provisions to deal with increased project costs due to factors beyond developer control i.E. Delay in development period due to non- performance by procurers and material adverse conditions".