The Hindu Business Line : Ministry issues new norms for hydel projects — Award to pvt players only through bidding process

THE Government has announced that the award of hydro-electric sites to private players for development of large projects of over 100 MW should be done solely on the basis of a competitive tariff-based bidding process.

In its guidelines for allocation of hydro sites for private developers, the Power Ministry has also made it mandatory for promoters to have long-term power purchase agreements (PPAs) of minimum 25 years tenure.

The award process would necessarily have to be through an international competitive bidding process, with a two-stage procedure featuring a separate request for qualification (RFQ) and a request for proposal (RFP), the guidelines have said.

To prevent undue delays in case of smaller hydro projects (capacities of less than 100 MW) being developed through the MoU route by private players, the guidelines require State Governments to include specific provisions to be inserted in the pact with intermediate milestones, which if not achieved on time would result in cancellation of the allocation.

The guidelines, which aim at enhancing hydroelectric generation capacity through private sector participation and bringing about uniformity in the approach of State Governments in allocation of hydro sites, has specified that developers must be required to submit a detailed action plan within six months of allotment with clearly identifiable intermediate milestones.

The guidelines specify that the rehabilitation and resettlement of the people affected by the project should be undertaken by the State Government in line with the minimum requirements of the National Policy on Resettlement and Rehabilitation for Project Affected Families - 2003.

The project developer would have to comply with the provisions of the environment clearance issued by the Ministry of Environment and Forests.

In case of larger projects of over 100 MW capacity, the guidelines stipulate that prospective developers should have access to a reliable Detailed Project Report (DPR), which should either be prepared by the State Governments or by any qualified Central Government agency.

The DPRs should also be vetted by another agency like the CEA, it has said.

Further, the project developers must demonstrate their commitments to the tariff through duly authenticated power purchase agreements at the indicative tariff with the distribution utilities, for at least 90 per cent of the energy produced.

The remaining power of up to 10 per cent could be operated on merchant basis.

The guidelines also allow the formation of a consortium by the bidders for taking up projects.

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