Companies that lost out on bids to set up power plants where the fuel type and source of fuel and location of the plant are not specified will now be kept in reserve. They will be asked to match the lowest bid of the winning bidder in case it walks out of the project or fails to complete it.
The Power Ministry has amended the standard bidding documents and guidelines for buying electricity from such projects, called Case 1 projects, to provide a safeguard in the event of the winning bidder – selected on the basis of the lowest bid – fails to provide the capacity, and to ensure that the capacity gets added.
Case 1 bids are those where the quantum and time period of power procurement is known but fuel type, source and location of the plant is not specified.
The changes have been brought about based on the request of some State Governments and the recommendations of an inter-Ministerial Group.
States and the Centre buy electricity through two types of bidding — Case 1 and Case 2. For Case 2 bids, the developer bids on the basis of specific fuel and location where the details are provided by the Centre or the State Government, whichever is calling for the bids.
Till now, projects under the Case 1 category were for 25 years. The Ministry has amended this to make it seven years and above up to 25 years from the date of commencement of supply of power and a provision to extend it by five years at the option of either the buyer or the producer.
The change in the time period has been made ‘in view of the change in the coal policy wherein concessional coal is available for the long term as well as medium term’, a Power Ministry note stated.
The amendments have also removed the cap of seven bidders at the request for quotation or the financial bid stage. This has been done to increase competition, according to the note.
Also, developers will now be able to add capacity without requiring consent from procurers.
Deviations from the standard bid documents by the procurers will now require the consent of the appropriate regulatory commission instead of the Centre.