The government has agreed to look into concerns raised by power companies over the Case-2 draft standard bidding guidelines, including those on disqualification clause, pricing of coal from domestic and overseas captive coal mines and termination of power purchase agreement (PPA).
Sources say the empowered group of ministers on ultra-mega power projects (UMPP) at its recent meeting has directed the power ministry to seek legal opinion on the proposed disqualification clause.
?We have been told to consult the law ministry on the disqualification clause. This is to ensure that it is invoked only for valid reasons,? a senior ministry official told FE.
The clause proposes to bar companies from bidding for power projects if they have been penalised by any arbitration or judicial authority or even if there is any adverse judicial pronouncement or arbitration award against them in the three preceding years.
The power companies have voiced their concerns over the proposal as it can be invoked even when developers default on power supply in circumstances which may not be under their control, such as delay in land acquisition and environmental clearances and transmission bottlenecks.
The ministry was also told to take a fresh a look at pricing of coal from domestic and overseas captive coal mines and termination of PPA in the light of concerns expressed by the power companies and bankers.
The draft document recommends a price linked to average Coal India (CIL) price based on a basket of mines. Power companies have strongly opposed this provision for lack of transparecny. They have suggested the task of price determination is better left to the proposed coal regulator.
Similarly, the draft proposal suggests capping overseas coal-mine pricing to 75% of the index cost (based on a six- month average) with a 4% pre-determined escalation. Power companies have strongly opposed these provisions by saying this could lead to super-normal profits for developer or make it impossible for him to meet contractual obligations ? electricity consumer interests would be hurt in either situation. At the same time, it could also discourage investment by Indian companies in overseas coal mines.
The document also has suggested terminating PPA even under circumstances that may be beyond developer?s control. For example, if a plant does not operate due to payment default by power procurer, PPA could still be terminated.
