Bihar, West Bengal, Telangana, TN to buy power from stressed projects

Under the first pilot scheme for reviving stressed thermal power projects without power sale contracts, four states namely Bihar, West Bengal, Telangana and Tamil Nadu have agreed to procure power for medium term (3 years) from these projects.

The ministry of power in April this year launched a pilot scheme for procurement of aggregate power of 2500 mw on competitive basis for medium term from generators with commissioned projects but without power purchase agreement (PPAs). PFC Consulting Limited was appointed as nodal agency and PTC India Limited as the aggregator for the same.

PTC received bids for procurement of 1900 MW at a discovered fixed tariff of Rs. 4.24/kWh without any escalation for next 3 years. The Successful Bidders were R.K.M Powergen Private Ltd. (550 MW); Jhabua Power Ltd (100MW); M B Power (Madhya Pradesh) Ltd. (175 MW); SKS Power Generation (Chhattisgarh) Ltd. (300 MW); Jindal India Thermal Power Ltd. (125 MW); IL&FS Tamil Nadu Power Company Ltd. (550 MW) and Jaypee Power Ventures Ltd. (100 MW).

PTC thereafter invited states to procure power at the discovered rate. The States who will be procuring power are Bihar (200 MW); West Bengal (200 MW); Telangana (550 MW) and Tamil Nadu (550 MW) while Haryana has consented to sign for 400 MW.

Deepak Amitabh, PTC Chairman & Managing Director told this paper recently that this scheme is a win-win for every stakeholder. “The agreement would be for three years with a composite charge and just 1 paise fixed charge in the tariff. At 55 per cent plant load factor (PLF), states would be buying power at Rs 4.24 a kilowatt an hour (unit), said Amitabh.

Further, every 5 per cent increase in PLF would get a 1 per cent discount in tariff under the agreement. In case, PLF goes below 55 per cent then the differential power would be sold in the open market and any under-recovery would be charged to distribution company. “If power is sold at a premium, the profit would be divided equally between discom and generating firm. This arrangement would be different from the normal power purchase agreement under which a discom pays fixed charge even if it does not draw the contracted power,” he said.

Amitabh also said that PTC is planning another tranche of 2000-3000 MW in the coming months.

Power under this mechanism would be from stressed power assets. With the fate of these assets hanging and they likely to land in insolvency tribunal, there is a question mark on signing of contracts. Amitabh, however, said sale of plants under insolvency should not be an issue. “I don’t see any difficulty in signing if an exemption is required we will ask the government,” he said.