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Anil Sasi

New Delhi , Feb. 6

WITH over 10 major power projects in the pipeline planning to sell their generation to power traders, domestic financial institutions led by SBI, ICICI, IDBI, PFC and IDFC have come together to chalk out a payment security model for the funding of such projects.

The institutions have already held a meeting in Mumbai on the issue and are expected to hold another set of meetings to firm up the broad parameters based on which they would finance these projects.

Essar Power's 1,500-MW Hazira project, Jindal's 1,000-MW Raigarh project, Nagarjuna Power Corporation's 1,015-MW Mangalore project and the Jaypee group's 1,000-MW Karcham Wangtoo hydroelectric project are among those where the promoters are in talks with power trading companies for offtake of electricity, instead of selling it to the State electricity boards or other distribution utilities.

In case of these new projects, traders would evacuate power directly and then sell it to one or more distribution utilities or high-tension consumers.

"A number of major power projects in the pipeline, with cumulative installed capacity of over 6,000 MW, have firmed up plans to sell power directly to power traders. Since institutions finance power project largely in the form of syndicates, we are working on a broad platform for the financing of such projects," an executive with one of the institutions said.

According to sources, the institutions are focussing on issues such as systemic constraints including lack of transmission infrastructure capacity, in case a trader wants to sell power to more than a single buyer.

The institutions are also looking at taking into consideration that power traders are adequately capitalised to undertake evacuation of power from larger projects, sources said.

Fledgling business

So far, power trading has been a fledgling business in the country, even as a large number of players have bagged trading licences and have kicked-off their trading business.

According to industry players, while most of the promoters are in talks with Power Trading Corporation for selling the entire generation from their plants, other traders such as NTPC Vidyut Vyapar Nigam Ltd,Reliance Energy, Tata Power, Essar Power and Amalgamated Power are also in the fray for trading assignments.

"All these power projects are extremely viable in terms of their tariffs. Therefore, finding buyers for power generated by them should not be difficult for traders," a power trader involved with one of the projects said.

The retail tariff for the Nagarjuna project is expected be at around Rs 2.08 per unit, for Essar Power's 1,500-MW project the tariff is projected to be around Rs 2.20 per unit, while the retail tariff in case of the Jaypee Group's Karcham Wangtoo project would be around Rs 2.08 per unit, industry sources said.

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