Seven companies have bid the lowest in an auction of three-year power supply contracts with stressed plants, quoting a price of Rs 4.24 per unit. The companies that matched the lowest price in the pilot scheme for plants stressed for want of power contracts are RKM PowerGen, Jaiprakash Associates, IL&FS, MB Power, Jindal India Thermal Power, Avantha Group’s Jhabua Power and SKS Power.
In April, the government had kicked off the pilot scheme for procurement of aggregate power of 2,500 Mw, with PFC Consulting Ltd as the nodal agency and PTC India is PPA aggregator. Bids were received for 2,200 Mw from eight companies. The scheme looks to address the issue of stressed assets. Lack of PPAs is one of the key reasons for stress in the power sector, besides factors such as promoters’ equity crunch, no coal supply and regulatory and contractual issues. Electricity distribution companies have not called long-term contracts in the last few years.
The scheme is likely to see tie-ups for a total of 1,900 Mw, assures minimum offtake of 55% of contracted capacity. The tariff will be fixed for three years without any escalation. Also, the fixed cost for the PPA auction has been kept at 1paisa per unit. As per the tender, the distribution company will get an additional discount of 1% in tariff on each 5% extra procurement over 55% of a project’s capacity.