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“International competitive bidding (ICB) for main plant packages is a welcome step forward to have competitive prices in view of tariff being determined based on competitive bidding for all upcoming projects”, additional secretary (energy) C P Mohanty wrote to head (finance) of CERC.
In its approach paper on “Terms and Conditions for Tariff Regulations’, CERC has underscored the need for introduction of mandatory ICB for main plant packages/major packages and for all the remaining packages to ensure price competitiveness. The regulator held that in case of a single bidder, it would be difficult to consider that cost as efficient cost for tariff determination due to lack of competition.On capital cost, the state government suggested that it may be fixed as per projected capital expenditure arrived at based on the benchmarks of capital cost fixed by CERC. Also, the benchmark capital cost as specified by CERC may be considered for the purpose of normative capital cost and there should be ample provision to review it in consultation with the stakeholders.Similarly, on fuel issues, the state government has opined that adequate fuel supply linkage should be ensured by the generators before the financial closure.
Besides, normative/agreed blending ratio may be fixed and coal shortage scenario is to be adequately verified through accounting mechanism. “The blending ratio should be standardized and a normative ratio as per the manufacturers’ specification may be fixed. Pit-head stations may not be allowed for blending of imported/-e-auction coal with the linkage coal. However, the consent of the beneficiary may be made mandatory before carrying out any sort of blending’, the letter said. The CEC approach paper while noting the shortcomings of Coal India Ltd (CIL) in supplying the committed quantum of coal and uncertainty in gas supplies held that the situation may lead to power plants relying more on use of blended coal and this may escalate energy charges.
