States to procure power through rate-based bid

A number of states, particularly those suffering from severe power shortage, have resorted to procuring power through rate-based bidding on a long-term basis.

In the ‘Case-I’ bidding process, developers take full responsibility for project development including acquisition of land, availability of water and fuel linkages.

So far, Rajasthan, Haryana and Maharashtra have struck deals with developers for long-term power purchase at rates ranging between Rs 2.36 per unit and Rs 3.26 per unit. Further, power procurement through the Case-I bidding would also benefit the states that were not in a position to set up their own generation capacity.

A power ministry official told Business Standard that so far Rajasthan has been able to strike a deal with Adani Power to sell 1,200 Mw at Rs 3.25 per unit. Haryana, too, has selected Adani Power for the procurement of 1,424 Mw at Rs 2.94, Lanco for 389 Mw at Rs 2.36 per unit and the joint venture entity of GMR and PTC India for 300 Mw at Rs 2.86.

Maharashtra, which has been reeling under acute power shortage with a daily outage of 3,500-4,500 Mw, on Thursday finalised bids submitted by Adani Power, Indiabulls and Emco for the supply of 2,850 Mw. A Maharashtra government official said Emco would supply 200 Mw at Rs 2.88, Indiabulls 1,450 Mw at Rs 3.26-3.42 and Adani Power 1,200 Mw at Rs 3.26 per unit. These companies will have to start supplying power four years after signing of the power purchase agreement with the Maharashtra State Electricity Distribution Company, also referred to as MahaVitaran. If they fail to do so, a penalty of Rs 10,000 per Mw per day will be imposed on the generation companies.

Adani Power has finalised power purchase agreements for supplying about 6,000 Mw under the Case-I bidding.

The power ministry official also informed that at a meeting on November 15, more and more states were asked to invite competitive bidding. Accordingly, Uttar Pradesh has invited bids.

The official further noted that these initiative by states would help financing the projects by independent power producers and also assist in development of the necessary transmission systems for evacuation of power from these projects.