The Union Ministry of Power has cancelled auctions under Phase-II of the pilot scheme to salvage stressed power units. The auctions were held earlier in 2019 to ink power purchase agreements (PPAs) with 2,500 MW stressed electricity generating units. It has issued tenders afresh for selecting an aggregator for this batch of power plants. The move comes a year after NHPC was appointed as aggregator for Phase-II of the scheme.
Though no reason has been cited by the ministry for the cancellation of the auctions, however a fall in spot market prices for electricity amidst overall low demand could have prompted the move.
The pilot scheme is one of the two steps taken by the government to salvage commissioned power plants lying stranded, several due to lack of PPAs. The government has managed to bring as many as 11 coal-based projects with combined capacity of 12.7 GW out of stress over the last six months.
The first tranche of the pilot scheme had evoked lukewarm response from the industry, with only seven power plants with a combined capacity of 1,900 MW agreeing to sell electricity against the call for 2,500 MW. However, with the Central government tweaking bidding parameters for the second round, almost 4,000 MW private generators competed for an offered quantum of 2,500 MW.
The Rs 4.41 per unit price discovered in the latest auction was four percent higher than the previous versions as the industry accounted for risk factors such as deficit in receiving adequate coal, slippages in quality of fuel received and curtailment of fixed charges, depending upon vagaries of power demand of discoms.
As per the pilot scheme, the aggregator will sign PPAs with successful bidders and ink back-to-back power supply agreements separately with electricity distribution companies (discoms) interested in buying power from these units.
The power ministry has further advised PFCCL to undertake rebidding of Pilot Scheme-II through another aggregator. Under Phase-II of auctions held earlier, as many as 13 companies including Jindal Power, JSW Energy, Adani Power and Sembcorp emerged as successful bidders.
