The Hindu Business Line : Karnataka to invite proposals for merchant power plants

Game plan
The merchant power plants will supply power to customers in time-bound packages, having the option to trade power at spot rates depending on the market.

Mumbai , Jan. 3

In an effort to encourage merchant power plants (MPPs) in the State, the Maharashtra Government will soon invite proposals for setting up coal-based MPPs with capacity of 500 MW each.

MPPs are primarily independent power plants, but not owned or controlled by the Government. Such plants are not bound to sell power to the State Government utilities and are free to negotiate tariffs with industrial consumers. They will supply power to customers in time-bound packages, having the option to trade power at spot rates depending on the market.

Talking to Business Line, Mr Kawale, Principal Secretary (Energy), Maharashtra Government, said the State Government would not make arrangements for coal linkages for such MPPs. The State Government will only facilitate land acquisition, water supply and other critical infrastructure for the setting up such plants, he said.

He said the State Government would conclude MoUs with companies wanting to set up MPPs only after they submit detailed project reports, audited balance sheets, and power off-take arrangements.

Mr M.N. Ramachandra, Executive Director, Vindhyachal Hydro Power Ltd, said that in Maharashtra, the MPPs faced bright prospects, given the ballooning demand and the purchase power of bulk and industrial consumers.

Mr Ramachandra said that after the creation of national grid and commencement of power trading, companies would find MPPs an attractive business model.

However, sewing up coal linkages would pose some difficulties.

Also, the power companies may occasionally have to put up with intervention from the electricity regulator, which could upset their tariff expectations, he said.