Troubled power corps irked over govt's move to export 300 Mw to Bangladesh

NTPC-DVC combine has been given approval to supply power to the neighbouring country

In a case of domestic coal being utilised for feeding power into a neighbouring country, India has allowed NTPC-Damodar Valley Corporation (DVC) combine to export 300 megawatt (Mw) power each, on long-term and short-term basis to Bangladesh.

This comes even as the Reserve Bank of India, in its argument against the government, has blamed it for favouring public sector undertakings (PSUs), in general, at the peril of private power producers.

The Central Electricity Authority (CEA), under the Ministry of Power, has given the approval despite objections from private power producers that neither coal nor power purchase agreements (PPAs) for supply of power are readily available in the Indian market.

The government approval is based on the premise that this was required in the interests of bilateral relations. “In cross-border trade with neighbouring countries, there are some commitments which are being met by buying power from the distribution companies. We do such arrangements with Nepal, and Bangladesh already has some arrangements in place where NTPC is supplying coal-based power,” A K Bhalla, Union power secretary, told Business Standard in an interview.

Bangladesh Power Development Board (BPDB) issued a request for proposal (RFP) in December 2017 for the supply and delivery of 500 Mw at interconnection point from Indian power plant owner, supplier or trader. DVC tied up with NTPC Vidyut Vyapar Nigam (NVVN) to put in a bid for supply of 300 Mw power each, under both long-term and short-term arrangement, at an average (levellised) tariff of $0.0777 and $0.0566, respectively, over the contract period.

BPDB had sought 500 Mw for short-term procurement starting June 1, 2018 till December 31, 2019.  Another 500-Mw long-term procurement was to start from January 1, 2020, till May 31, 2033, subject to the terms and conditions of the PPA. BPDB had the right to advance or extend the short-term procurement by three months, without the overall quantum of power under this process exceeding 500 Mw at any stage.

Power Trading Corporation (PTC)-West Bengal State Electricity Distribution Company combine was second in the tender for short-term power supply at a levellised tariff of $0.0584. The remaining 200-Mw contract would be placed on them since DVC-NVVN would supply 300 Mw of the total requirement of 500 Mw. Both these bids are through domestic linkage coal price, which is lower than the e-auction coal and is guaranteed by Coal India under the fuel-supply agreement. 

In the long-term category, DVC-NVVN got the contract for 300 Mw at the levellised tariff of $0.0777. PTC-Meenakshi Energy combine finished second, with a levellised tariff of $0.0786 for the remaining 200 Mw. Their bid is based on imported coal.

“It (power to be supplied to Bangladesh) is a small quantity and we need to examine such requirements, keeping in view our bilateral relations and bilateral agreements entered into between the governments,” Bhalla added, when asked whether the decision ran against the interests of private power developers.

CEA is the designated authority for permitting export of power and there are cross-border trade guidelines for it. “They have to certify this is as surplus power and that it can be sold outside the country,” he said.

Besides, the Central Electricity Regulatory Commission had come out with draft regulations for cross-border trade some time back, but was yet to finalise a policy.

An industry insider, who did not want to be named, said the Centre’s decision to allow export of power to Bangladesh, which would be generated from domestic coal, was “partisan” since PSUs get preferential coal allotment.

BPDB had earlier issued letters of intent to the successful bidders and after the CEA go-ahead, PPAs for supply and delivery of the contracted power at the interconnection point would be signed.

If the CEA permission was rejected, the bidders would have lost Rs2 million in bid guarantee. The industry insider quoted above said earlier in 2015, the government had turned down an application of the Punjab state company for a similar supply of power arrangement with Bangladesh. At that time, it was felt that the power supply situation in India did not warrant export of power to other countries.