Power plants have quoted high tariff in the latest round of auctions of electricity supply contracts, casting doubt on acceptability of the price by state distribution companies.
The high bids took the sector by surprise as it expected a lower tariff following changes in auction rules by the Centre, heeding to the demands of power companies. The power ministry had kicked off the scheme to salvage stressed assets idling due to lack of PPA opportunities.
Fifteen power plants of companies like JSW Energy, Jaiprakash Associates, Jindal Power, Sembcorp Gayatri and Essar Power bid for securing the threeyear power purchase agreements (PPAs) with states. The reverse e-auction for the PPAs was held on Thursday with a base price of Rs 4.7 per unit. The lowest price discovered during the auction was Rs 4.41 per unit, at which supply bids aggregating to 2,520-mw have been received, sources said.
A government official said the final tariffs including the transmission charges will cost Rs 4.7-Rs 4.8 per unit to the states.
Experts said finding buyers in state distribution companies at this price will be a tough task. “State distribution companies were not accepting the previous tariff of Rs 4.24 per unit. Selling this tariff to them will be a mammoth task,” said an industry insider requesting anonymity.
The price is higher against Rs 4.24 per unit discovered in the pilot round of the scheme held in April last year.
The tariff in the current round was expected to fall with the government agreeing to allow escalation in tariffs and minimum offtake of 85% of contracted capacity to the power plants. In the last round, the fixed cost was kept at 1paisa per unit with minimum offtake guarantee of 55%. The government was expecting lower tariffs in the range of Rs 3.50-4 per unit in the current PPA auction round.
Sources said Jindal Power has bid for supplying the highest quantity of 515-mw from its two plants in Chhattisgarh at Rs 4.41per unit. Adani Power’s Korba West plant has bid for 295-mw while JSW Energy has committed 290-mw.