The Central Electricity Regulatory Commission has developed draft guidelines for competitive bidding to procure generation on long-term contracts.
The guidelines aim to provide a boost to development of large regional projects, penalties for delays and degradation of contracted capacity and specify essential requirements of supply, scheduling, dispatch, quality and safety as per the Central Electricity Authority standards.
"Draft guidelines prepared by the CERC prescribe a broad transparent framework for competitive bidding under regulatory supervision," said a CERC press release.
"Distribution licensees of a region would need to come together in the form of a consortium of bulk buyers and collectively invite bids for setting up regional projects," it adds.
The procuring agency may be the distribution licensee, state electricity boards or their successor entities, state governments, electricity departments and/or trading licensees individually, or, as a consortium. Such entities may belong to one or more states, or one or more regions.
In case of inter-state projects, the central government can constitute a procuring agency in consultation with stakeholders, while in case of intra-state projects, state governments will be allowed to set up procuring agencies.
The tariff shall be bid in terms of annual fixed charges and variable charges, both of which will include indexed and non-indexed components. Quoted tariffs will be inclusive of all taxes.
The procuring agency may agree to setting up of generating plants of higher than bid capacity.
Spare generating capacity would belong to the owner, who could use it as captive, merchant capacity or for sale as a separate power block under a separate long-term contract.
The procedure for inviting bids shall be a two-stage process, the first being Request for Qualification and the second, Request for Proposal.
If the number of qualified bidders after RfQ is less than three, approval of the appropriate commission shall be obtained before proceeding from RfQ stage to RfP stage.
Approval of the appropriate commission shall be required for continuing with the process if less than three bidders remain after the first stage. In case there is only one qualified bidder or the commission does not allow proceeding with two bidders, the process shall stand aborted.
Even at the second stage, the process could be aborted if there is only one bid for RfP, or if the commission is not satisfied with the competition resulting from two bids.
The appropriate commissions' approval shall be required for the bidding documents and adoption of tariff.
The central or state public sector undertakings would be free to participate in competitive bidding, except where forbidden by law.
Existing generators such as National Thermal Power Corporation, National Hydroelectric Power Corporation, state generating companies, state electricity boards and independent power producers shall continue to supply power as per their existing contracts and their tariffs will be bound by the limits determined by the appropriate commissions.
Generating projects such as extension projects and ongoing projects may be set up on a cost plus basis. The procurement of plant and equipment shall be done through competitive bidding in suitable packages.
Addition to generation capacity in future, however, should be through competitive bidding as far as possible, according to the draft guidelines.
