Power Fin may need discoms nod to invite bids for mega projects

Power Finance Corporation may now need an authorisation from distribution companies to invite bids on their behalf for the proposed ultra mega power projects.

Distribution companies that will buy power from the projects may also provide escrow accounts to address the payment security concerns of the ambitious projects.

"At a presentation made by the Power Finance Corporation (PFC) and the power ministry to the Central Electricity Regulatory Commission (CERC), the regulator also suggested that the PFC needs to get power purchase commitments from the distribution companies," sources said.

In an attempt to clarify the PFC's role in inviting bids for execution of the proposed ultra-mega projects of 4,000 Mw each, the power ministry had earlier communicated to the CERC that the standard bidding document process was finalised after consultations with the apex electricity regulator and most of the suggestions of the CERC have been incorporated.

The CERC had asked the ministry to clarify the issue. Under the Electricity Act 2003, only those wanting to procure power or their agents are entitled to invite bids. "It is unclear in what capacity the PFC is involved in the entire exercise," a CERC official had said.

In a letter written by the ministry to the CERC, it was also mentioned that before initiating the bidding process for the projects, states and utilities intending to buy power were involved. "The shell companies floated by the PFC are acting on behalf of the states and utilities as authorised by them," it stated.

The ministry also asked the regulator to send its representative to the weekly review meetings on ultra mega projects held in the ministry.

"The idea is to give due attention to the regulatory issues in the whole process and providing necessary clarifications in real time," a ministry official said.