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The government’s plan to prevent power rates from going up due to the re-allocation of coal mines could also restrict competition in the auctioning.
The draft approach paper for e-auction has nothing for power companies that fall in the case-II category, closing the doors even on the new players.
Power industry executives said the new rules give out the sentiment that investment of the existing players is being safeguard.
“Why should a new player come when they are creating a mess of the whole re-allocation system? With the government not offering to provide any assistance, players with no power-purchase agreement will stand to lose,” said a senior industry executive.
The case-II bidders in the power sector own up the responsibility of setting up the power project with the Centre or the state governments acting just as a facilitator.
“Around five projects with a cumulative capacity of 9,000 mw in Uttar Pradesh, Haryana and Punjab fall in the bracket of case-II bidding. Stakes of companies such as Sterlite, L&T, Lanco and Jaypee stand contested with the government keeping them out of the auction,” said A K Khurana, director general, Association of Power Producers.
In case-I type projects, clearances, land and other infrastructure is provided by the government.
The government plans to have two different modes of e-auction for the cancelled coal blocks. For the regulated sector, where the end use is generation of power, there will be reverse auction.
Whereas for captive power generation, the steel and the cement sectors, there would be forward bidding model.
“The government wants to stop gaming in the bidding but is being preferential to the projects which have fuel arrangement, power-purchase agreement and infrastructure. But this is what would lead to manipulation of bids,” said a power sector executive.
The industry experts said in all likelihood, the cancelled mines are going back to their prior owners. In the detailed tender document which the potential bidders would have to submit, asks for precise details on end-usage of coal, amount of coal needed for same, distance of end-use plant to the mine and the completion status of the same. This could translate into power, steel & cement projects which had attached captive mines getting it back, after payment of penalty.
The captive power producers (CPP), which have been kept in the bracket of forward bidding, are against this move of the government.
“In the meeting with the stakeholders on 16 December, captive power producers addressed their concern that they are already buying coal form Coal India at 35 per cent higher rates. Keeping forward bidding model for us would escalate our power cost. Crisis looms over the sectors having captive power production,” said a CPP executive.
In the reverse auction mode bidder who will quote the lowest would get the mine for generation and sale of power. Whereas, in the forward bidding model the bidder quoting the highest price would get the mine for end use.
The draft approach paper for e-auction has nothing for power companies that fall in the case-II category, closing the doors even on the new players.
Power industry executives said the new rules give out the sentiment that investment of the existing players is being safeguard.
“Why should a new player come when they are creating a mess of the whole re-allocation system? With the government not offering to provide any assistance, players with no power-purchase agreement will stand to lose,” said a senior industry executive.
The case-II bidders in the power sector own up the responsibility of setting up the power project with the Centre or the state governments acting just as a facilitator.
“Around five projects with a cumulative capacity of 9,000 mw in Uttar Pradesh, Haryana and Punjab fall in the bracket of case-II bidding. Stakes of companies such as Sterlite, L&T, Lanco and Jaypee stand contested with the government keeping them out of the auction,” said A K Khurana, director general, Association of Power Producers.
In case-I type projects, clearances, land and other infrastructure is provided by the government.
The government plans to have two different modes of e-auction for the cancelled coal blocks. For the regulated sector, where the end use is generation of power, there will be reverse auction.
Whereas for captive power generation, the steel and the cement sectors, there would be forward bidding model.
“The government wants to stop gaming in the bidding but is being preferential to the projects which have fuel arrangement, power-purchase agreement and infrastructure. But this is what would lead to manipulation of bids,” said a power sector executive.
The industry experts said in all likelihood, the cancelled mines are going back to their prior owners. In the detailed tender document which the potential bidders would have to submit, asks for precise details on end-usage of coal, amount of coal needed for same, distance of end-use plant to the mine and the completion status of the same. This could translate into power, steel & cement projects which had attached captive mines getting it back, after payment of penalty.
The captive power producers (CPP), which have been kept in the bracket of forward bidding, are against this move of the government.
“In the meeting with the stakeholders on 16 December, captive power producers addressed their concern that they are already buying coal form Coal India at 35 per cent higher rates. Keeping forward bidding model for us would escalate our power cost. Crisis looms over the sectors having captive power production,” said a CPP executive.
In the reverse auction mode bidder who will quote the lowest would get the mine for generation and sale of power. Whereas, in the forward bidding model the bidder quoting the highest price would get the mine for end use.
