Maharashtra invites bids for Bhadrawati project on BOOT basis

Maharashtra, which is currently facing a daily power shortfall of 500 Mw, has for the first time, initiated a process to add generation capacity based on discounted tariff or highest upfront premium basis for one of its thermal power projects.

The state-run Maharashtra Industrial Development Corporation (MIDC) has invited bids for the 1,320 Mw thermal power plant at Bhadrawati in the coal-rich Chandrapur district on a Build, Own, Operate and Transfer (BOOT) basis. It has also engaged the Infrastructure Development Finance Company (IDFC) under its India Infrastructure Initiative for providing project preparation and partner selection services.

“The bidder who will give the highest upfront premium or offer discounted tariff will be given the contract for the proposed project. Power will be made available to local industrial consumers. This is almost similar to Case II bidding, wherein the developer is expected to bid on the basis of specific fuel and location. In case of Bhadrawati, MIDC owns and is in possession of 1,300 acres of land at the project site, free of any encumbrances and rehabilitation issues,” an MIDC official, who is currently involved in the bidding process, told Business Standard.

MIDC’s move comes at a time when another state power generation utilitity, MahaGenco, is carrying out a capacity addition of 3,230 Mw. This apart, private sector developers are in the process to add more than 5,000 Mw. Further, the distribution company, MahaVitaran is procuring power from the open market through short term, medium term and long term contracts as Maharashtra’s demand for power is expected to increase by 700 Mw annually.

However, the managing director of a power company, who did not want to be identified, raised doubts over the implementation of the Bhadrawati project on BOOT basis in the absence of a 25-year-long power purchase agreement.

“There are issues if the developer wants to operate a project and sell it through open access, which is currently available for one year and needs to be renewed thereafter. The developer will face a lot of problems in the mobilisation of funds, especially from banks,” he noted.

Bhadrawati has a chequered history. Earlier efforts by the Maharashtra government to set up a power project at the site had failed to materialise. The Ispat group had proposed to set up a 1,920 Mw thermal project at Bhadrawati, first in the 1990s, and later in April 2005. However, the project did not take off due to issues relating to land acquisition and fuel linkage.

This time though, everything has been sorted out. The Ministry of Environment and Forests (MoEF) has cleared the terms of reference for an environment impact assessment study, which has been completed and submitted to the MoEF, along with an application for environment clearance.

The state water resources department has already issued a notification for providing water availability to the Bhadrawati project.

The Central Electricity Authority (CEA) has recommended the project for coal linkage and the recommendation has been forwarded by the power ministry. The transmission network is available in the vicinity of the site.