The Hindu Business Line : Ultra mega power projects may hit regulatory hurdle

Govt guidelines
According to the Competitive Bidding guidelines, only the procurer of power, which in most cases is the distribution company, or an agent of the procurer is eligible to invite bids to set up generating stations

New Delhi , April 21

There could be a spanner in the works for the Government's ambitious `ultra mega' power projects. The Central Electricity Regulatory Commission (CERC) has asked the Power Ministry to clarify the jurisdiction of Power Finance Corporation (PFC) in inviting bids to execute seven proposed ultra mega projects of 4,000 MW capacity each, Government officials said.

Bidding guidelines

This is because under the Government's Guidelines for Competitive Bidding, only utilities wanting to procure power (mainly distribution utilities) or their agents are entitled to invite bids to set up generation projects. In the case of the proposed ultra mega projects, PFC — a state-owned non-banking finance company — has been designated as the Union Government's nodal arm responsible for inviting bids for the projects.

Also, since PFC is a funding institution that plans to arrange a major portion of the debt requirements for the projects, and thereby an "interested party", its role in calling for the bids has come under regulatory scanner, officials said.

"According to the Competitive Bidding guidelines, only the procurer of power, which in most cases is the distribution company, or an agent of the procurer is eligible to invite bids to set up generating stations. Therefore, it is unclear in what capacity is PFC involved in the entire exercise, as a procurer of power or as an agent of a procurer," an official said.

Following the CERC directive asking for a clarification on the issue, the Power Ministry is set to make a presentation to the commission next week clarifying PFC's role in the entire exercise, officials said.

Tariff-based bids planned

The Centre has already firmed up plans to award five of the projects in the next 12 months through a process of tariff-based bidding.

PFC has set up subsidiaries to conduct preliminary studies and obtain Government approval for the planned projects.

These subsidiaries will be taken over by the companies that eventually win the bid to manage the projects. Initial bids have already been invited for three projects.

Both domestic and international power companies have evinced interest in the projects.