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NTPC will soon take a call on scrapping a recent tender it called for developing 2,000 MW of solar power projects.
An NTPC official said the company has sought an assessment of the cost impact due to the safeguard duty on solar cells and modules from project developers who participated in its interstate transmission system (ISTS)-connected solar photovoltaic (PV) tender.
If there is a substantive impact expected due to the safeguard duty, NTPC will decide whether to scrap the bids and call for fresh ones, the official said.
Bidders will not be allowed to revise the quantum of project they have bid for but will have an opportunity to factor in the impact on tariff due to the 25 per cent safeguard duty imposed on imported solar cells and modules.
The Ministry of New and Renewable Energy had written to the Ministry of Finance, seeking an exemption from the safeguard duty for the projects that had already been bid out. But since the financial bids have not yet been opened in the NTPC project, the project is not eligible for this benefit, the NTPC official said.
According to ICRA’s estimates, the 25 per cent duty would result in a 15 per cent increase in the capital cost for a solar power projects, which in turn would result in an increase in tariff by about 30-35 paise per unit to maintain a similar level of returns for project developers.
The solar bid tariffs largely remained below ₹3 per unit in calendar year 2018 varying between ₹2.44 and ₹2.75, with expectation of favourable price movement in PV modules following the policy changes in China. The imposition of safeguard duty is likely to increase the bid tariffs to ₹2.9 – ₹3.1 for the upcoming bids, Sabyasachi Majumdar, Group Head - Corporate ratings, ICRA said.
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