To provide relief to the power sector, which is reeling under a fuel crisis, the Planning Commission has circulated a paper on public-private partnership in electricity generation. In the paper, the commission pointed to the problems faced by power producers using domestic, as well as imported fuel. It has suggested bidding be carried out at capacity charge, while the variable charge (which comprises fuel charges) would be passed on to consumers.
Capacity charge is the billed amount that covers the difference between the power a customer expects to be available and the power the customer actually uses.
The paper suggested power procurers also shoulder the impact of increase or fall in fuel prices.
After seeking feedback from stakeholders, bankers, consumers, developers and distribution utilities, the power ministry is expected to amend the standard bidding document.
The issue was discussed at a meeting between Power Minister Veerappa Moily and power producers on August 29. The ministry is expected to circulate and upload the paper in its website this week or early next week.
Ashok Khurana, director general, Association of Power Producers, told Business Standard, “The Planning Commission recognises the difficulties of fuel risks for 25 years by any developer. An increase or decrease in fuel costs would be effected in tariff,” he said. He added consultation was necessary before any decision in this regard.
On condition of anonymity, a senior official at a private power project said the Planning Commission’s move was crucial for power producers. “Currently, these producers are unable to pass on the burden resulting from increased costs of imported fuel. However, according to the Planning Commission’s paper, the developer and the procurer would share the increased cost, which is a positive.”
The Planning Commission stated, “The landed cost of fuel shall be the weighted average cost of fuel in Rs /kg, which is due and payable by the concessionaire (power developer) for procuring fuel, including the cost of washing, if any, and the cost of transportation, as specified (the landed fuel cost). The price of imported fuel shall be the average of global coal indices comprising: (a) NEWC Index (New Castle); (b) RB index.”
It added the concessionaire would try to identify, as soon possible, alternate source(s) of fuel supply and transportation to build and maintain the normative fuel stock under the alternate fuel supply arrangement (AFSA). It should notify the utility of the details of the landed fuel cost under the AFSA and provide other information the utility may require for demonstrating the AFSA was based on the best prices for supply and transportation of the fuel. Also, the concessionaire should, with the concurrence of the utility, submit the AFSA for review and approval of the appropriate commission. The fuel charge payable by the utility for any electricity produced from such fuel should be determined on the basis of the landed fuel cost, it stated.
