Reliance Power Limited & Tata Power have opposed the recent changes proposed by the government over Standard Bidding Documents (SBDs).
According to both the leading private power sector companies any drastic changes in SBDs would make it difficult for them to put competitive bids under proposed new norms.
As per the Reliance Power
- The new proposed SBDs come with drastic changes which are not adopted even in developed economies and is completely out of sync with the current market realties.
- In a developing economy such as ours, where capital is constrained, the SBD need to address the concern of all stakeholders including developer, lender, off taker, etc, which is substantially missing in the new SBD.
- The new formulation crafts a strict, prescriptive and rigid policy framework along with arbitrary price caps and pre-determined escalation factors that seemingly attempts to foresee market dynamics and other aspects of power plant development and operation through the life of the project.
As per the Tata Power:
- The proposed changes are too superficial and too little to correct the core conceptual shift.
- Government should come out with a framework that serves the development aspect more predictably.
- The current draft model power purchase agreement (MPPA) does recognize the impossibility of passing the long term fuel risks to the project developers, but puts forward some very complex structures and offers differential treatments on the basis of ownership and location of coal assets.
- Similarly, the fixation of imported coal price, the segmented treatment between coal procured from captive mines overseas and coal procured from open international market defy logic and was not based on market realities.
- The qualifying criterion set in the document in terms of qualifying investments appears to be too stringent. Besides, the recommendation to short list only 7 to bidders for the RFP stage could be very restrictive and such a stipulation may restrict development of new qualified developers and therefore affect the sectoral growth.
The assertion by the two leading private sector players in the power sector comes close on the heels of the objections raised by the Central Electricity Regulatory Commission (CERC) over the new SBDs. The Empowered Group of Ministers (EGoM) is scheduled to meet on August 8 (Thursday) to give a final shape to the SBDs to kick off the second round of ultra mega power projects (UMPPs).
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