Gujarat, Uttar Pradesh and Maharashtra to rescue stressed power projects

Three states have come forward to participate in the bidding process, wherein cheap power will be procured from stressed assets as part of a new power ministry scheme.
 Gujarat and Maharashtra have asked for 500 Mw each under the programme while Uttar Pradesh is set to procure 1,000 Mw.
 
The scheme was launched as one of the measures to provide relief to stressed power generating assets. The new centralised bidding for 2,500 Mw will be held, which would invite quotations from power developers for a lump sum tariff. This would also involve power aggregation and disbursement according to the cost and the states’ demand.

 
The lump sum tariff would have to be quoted with a “very nominal” fixed cost portion. Officials said power developers will bid against the cap offered on fixed cost. Power tariff for coal-based power plants comprises fixed cost and variable cost. Fixed cost is the capital cost of the power plant and variable cost comprises cost of fuel, transportation, etc. If a state has signed a power purchase agreement (PPA), it has to pay the fixed charge even when not procuring power.

 
The government will also set a power aggregator, which would call for tenders and collate all bids and power supply. It would then disburse power to states that wish to procure low fixed cost electricity. Sources said state-owned Power Trading Corporation (PTC) will be the aggregator and the bid document is being drafted by Power Finance Corporation (PFC).

 
PFC executives said Gujarat has expressed interest to follow a similar bidding route to procure an additional 5,000 Mw.
 
In the last five years, no fresh PPAs have been issued by any states except Kerala and Uttar Pradesh. UP later cancelled the PPAs it signed. About 105,000 Mw of power plants are classified under stressed assets due to either lack of fuel supply or PPAs or both.