 "Adani Power's premium bid to win project in Rajasthan")
Adani Power Transmission Limited (APTL) has bid a premium amount to grab a project in Rajasthan instead of quoting a subsidy given by the state government in the form of viability gap funding (VGF).
APTL's bid is 20 per cent lower than the 'unitary charge' (lowest monthly fee for transmission service) prescribed by Rajasthan Rajya Vidyut Prasaran Nigam, a state power transmission utility owned by the Rajasthan government, and would pay the difference as premium to the utility.
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Companies were supposed to quote higher than the unitary charge with the government paying the difference as VGF. Among the other qualified bidders were Tata Power, Essel Infra, Sterlite Grid, and KEC International.
The bidding was called by the state power utility for 145-km long 400-Kv Suratgarh-Bikaner intrastate transmission line. The project cost is Rs 238 crore and the annual approved unitary charge by the Rajasthan Electricity Regulatory Commission was Rs 26 crore. APTL quoted Rs 21 crore, said an official in the know. The other qualified bidders in the fray were Tata Power, Sterlite Grid, Essel Infra, and KEC International. In an emailed response to the queries sent, a spokesperson for Adani Power said the company would not like to respond.
State government officials said it was the first ever case of premium bidding in power transmission and that it would set a precedent for the sector.
The project falls in the category of a public-private partnership (PPP) model. After announcing the tender, the Rajasthan power utility added the VGF element to the project last year. It also announced a 'unitary charge'. Quoting a figure lower than the unitary charge would mean the company would have to pay the difference to the state utility.
In APTL's case, the difference is Rs 5 crore, which it would pay to the state utility.
A VGF project cost is estimated on constant traffic and capital expenditure. Given the load on the transmission line would remain constant, the company quoting a premium has strong capex position to build it at cheaper cost. The reason also could be desperation to win the project. But, given the decreasing cost of transmission with steel prices coming down and commodity cycle in the negative and increased power demand, the line can be built at a cheaper rate than projected by the bidding agency.
The project is the eighth transmission project in the state to be built under PPP mode. Four projects have been commissioned since 2009 when Rajasthan opened up for private participation. Rajasthan is the first state to sign up for Ujwal Discom Assurance Yojana for power distribution turnaround.
