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AUG 05 2013

New bid rules unlikely to make power cheaper

  • Economic Times, ET Bureau / Hyderabad
  • Created: Mon 05th AUG 2013

Prospects of cheap power from giant new projects have faded as private firms such as Tata Power and Reliance Power say the new bidding norms make it difficult to quote low tariffs while lenders say it would be difficult to approve loans on the new terms.

The power ministry plans to seek approval for the disputed guidelines this week. Top executives of Tata Power, Adani Power , GMR Energy, Jindal Power, Lanco Infratech and CLP India have written to power minister Jyotiraditya Scindia saying companies would not be able to place competitive bids for ultra mega power projects and other location-specific plants based on the proposed framework.

Most companies have suggested that the existing norms, which have helped them build large capacities, should be modified to address the problem areas instead of overhauling the terms completely. Industry sources said Reliance Power finds the new bidding documents discouraging.

India's top lender State Bank of India too said the new bid guidelines are "inviting a new set of problems." "In our opinion, the proposed arrangement might act as a major disincentive for domestic as well as foreign lenders to such projects. ...private sector will also find it difficult to take up fresh investment on the proposed terms," SBI has said in his letter to Scindia.

He had asked the companies and banks to send their comments on the bid documents after a meeting on July 24 of an advisory group headed by the minister and constituting top officials of big private and state-run power companies, lenders, analysts, and former and present bureaucrats of the power ministry.

All members of the group outside the power ministry had opposed the new bid guidelines.

The industry has been opposing the proposed bid norms ever since they have been drafted. However, the power ministry has already circulated the draft bidding norms for comments from other ministries as an empowered group of ministers chaired by defence ministry AK Antony is likely to take up the issue on Thursday.

A senior official of the ministry said, "The industry's concerns will be duly addressed."

Tags

Adani Power Ltd Reliance Power Energy Bank of India Indus Lanco Infratech Power Tata Power India

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