Centre invites comments on revised bid document for BOO power projects
After the fiasco over bidding for new ultra mega power projects (UMPPs) and power projects based on domestic coal supply, the Union Ministry of Power has come out with new standard/model bidding documents like request for qualification (RFQ), request for proposal (RFP) and power purchase agreement (PPA). They will be applicable for power projects to be developed on build, own, operate (BOO) basis. The Ministry has sought views from the stakeholders up to September 1.
As per the bid documents and guidelines the RFQ will be issued in 75 days while submission of request for proposal (RFP) to be done in 225 days and evaluation of bids and issue of letter of approval (LOA) in 240 days. Two Special Purpose Vehicles (SPVs), namely the Operating SPV and the Infrastructure SPV, will be incorporated by the nodal agency.
Deloitte Touche Tohmatsu India’s senior director (consulting) Debasish Mishra told Business Standard, “These bid documents have given the flexibility to the bidder to quote fixed costs for each year of the contract period and variable cost for the first year that would be escalated as per the inflationary index published by the regulator. This is good system of balancing risk on the fuel side and reward efficiency in project execution, financing.”
Crisil Ratings director Manish Gupta said removal of mandatory requirement of open capacity will be beneficial. However, higher costs in terms of procurement of land for coal production beyond 5 years may result in higher cost of production.
”The revised guidelines has partly addressed the industry concern on transfer of assets to state utilities post completion of concession period. Guidelines prescribe reverting back to the BOO model — whereby the plant ownership post concession period will continue to vest with the developer. However critical project elements such as captive coal block and land for power station will be owned by the discom which may pose a regulatory risk in terms of renewal of lease,” he notes.
According to the new bid document and guidelines, the Infrastructure SPV will transfer the critical land for the power station on a lease basis to the Operating SPV. Further, the Infrastructure SPV will transfer the land that is sufficient to enable the Operating SPV/Seller to source coal required to operate the power station at normative availability for a period of at least five years from the COD of 1st unit on a lease basis.
