22 discoms to buy power from mega projects

In a big step towards achieving the government's ambitious aim of developing ultra mega power plants, 22 distribution companies of nine states today signed pacts to buy electricity amounting to 4,000 Mw each from the Sasan and Mundra projects.

Utilities from Delhi, Gujarat, Maharashtra, Uttaranchal, Punjab, Madhya Pradesh, Haryana, Rajasthan and Uttar Pradesh inked the power purchase agreements with Sasan Power Ltd and Coastal Gujarat Power Ltd, the two special purpose vehicles set up by Power Finance Corporation for the two projects.

"For the first time in the country PPAs are being signed for a capacity of this magnitude," Power Minister Sushilkumar Shinde said.

Shinde said the agreements are binding pacts and have in-built clauses for tariff escalation and dispute resolution. The Sasan and the Mundra projects are the first two of the nine such power plants that the power ministry has identified for development at an estimated cost of Rs 16,000 crore each.

The SPVs would arrange all necessary statutory clearances and would be transferred to the selected developers through a tariff-based competitive bidding by the end of this year.

More than a dozen companies including Tata Power, Reliance Energy, L&T, Essar, NTPC and GMR Energy are in the race for setting up these two projects.

Madhya Pradesh will get 1,500 Mw from the Sasan project, Delhi and Haryana 450 Mw each and Punjab 600 Mw. From the Mundra project, Gujarat has agreed to buy 1,900 Mw, while Maharashtra would get 800 Mw, according to the tentative allocation for the two projects.