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The second power purchase by a state in two years saw winning bids not crossing Rs 5 a unit. Andhra Pradesh (AP) is likely to buy 2,400 megawatts (Mw) under a tender in the range of Rs 4.27-4.98 a unit.
Of the 12 companies that bid for a total 6,579 Mw, seven qualified for cumulative power sale of 3,984 Mw. Among the selected companies are East Coast Energy, Adani Power (Korba), MB Power, a special purpose vehicle of Hindustan Power Projects in Madhya Pradesh, Mahan project of Essar, the Korba power plant of Lanco and Jindal India's thermal power project in Angul.
The earlier purchase bid was called by Kerala in November 2014 where the lowest bid received was Rs 4.10 a unit. Before that in 2013, Rajasthan and Tamil Nadu had received lowest bids of Rs 5.41 and Rs 5.66 a unit. The bidding for Andhra Pradesh was done on the revised case-I bidding document, which allows for annual revision of rate, over the period of the power purchase agreement of 25 years.
Sector experts said the bids were competitive if seen in the light of the new bidding norms. "The power generators have done their risk distribution competitively. The costs of their 20 per cent open power capacity, which gets no domestic coal, and the transmission charge of 60-70 paise a unit is being loaded on the final rate," said an expert.
The rate quoted has two components, fuel cost and fixed capital cost, inclusive of transmission charges and other variables. The criteria required bidders to quote the fuel and fixed cost separately, as the "bidders are expected to source concessional fuel from Coal India or a subsidiary, the cost of fuel which shall be included in the fuel charge shall be a pass through," said the tender notice by AP last year. Rupesh Agarwal, partner, BOD India, said, "The overall bid results are in sync with the market. The split between the fuel cost and the fixed cost reflects power developers are putting the uncertainties, cost pass through, take and pay risk on the fixed cost," said .
He, however, struck a cautious note saying the capital cost for the developers had gone up and they were factoring the same in the fixed cost rather than the fuel cost. This would be detrimental on the total cost in the long term, he added.
So, while the range of fuel cost was Rs 0.89-1.41 per unit, the fixed cost component was Rs 2.86-4.09 per unit.
