Petition No.16 of 2008
Date of hearing: 16.09.2008
Date of Order: 22-09-2008

1. Gidderbaha Power Limited (GPL) has been incorporated under the Companies Act, 1956 as a wholly owned company of the Punjab State Electricity Board (PSEB) with its registered office at PSEB building, The Mall, Patiala. GPL is a Special Purpose Vehicle (SPL) for the establishment of a coal based thermal power plant to be set up at village Ghhaga, tehsil Gidderbaha, district Muktsar on a build, own and operate (BOO) basis (hereinafter referred to as the ‘project’). GPL filed this petition for approval of capacity in the range of 2400 MW (± 10%) to be procured on a long term basis besides approval of deviations from the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by the Distribution Licensees (Guidelines) issued by the Ministry of Power, Govt. of India in Notification No.23/11/2004-R&R (Vol.II) dated 19.1.2005 (including subsequent amendments) in respect of the time schedule for completing some of the tasks contemplated under clause 3.2 of the Guidelines and clause 1.7 of the Standard Request for Qualification (RFQ).

2. The petition was heard on 16.9.2008 when the petitioner mainly reiterated the points highlighted in the petition. A plea was also made for submitting further information which has since been filed by the petitioner.
   
   
3. The Commission is required to decide :
   
   
   1. whether procurement of power is justified in terms of para 3.1 of the Guidelines and
   2. approve deviations from the Standard Bidding Documents (SBD) in the proposed bidding documents.
   
   These issues are discussed in the succeeding paras:
   
   
4. The guidelines stipulate that approval of the Commission is to be obtained if the quantum of power including that proposed to be sourced exceeds the demand projections based on the latest EPS for each of the 3 years after power to be procured becomes available. As the project is expected to be operational during 2012-13, the Commission needs to look at the total energy available in the years 2013-14, 2014-15 and 2015-16 and compare that with demand projections based on the latest (17th ) EPS. As per data earlier furnished by the petitioner, the installed capacity available to PSEB as on 31.3.2007 was 6201 MW which will increase by another 16468 MW upto 2016-17 thereby increasing total capacity to 22669 MW. Assuming that all the future planned capacity becomes available as per the present schedule, peak availability will exceed the peak demand by 4291, 4503 and 4419 MW during 2013-14, 2014-15 and 2015-16 respectively. The petitioner has, however, urged that estimates of peak availability are not likely to be achieved as it implies that all projects in the 11th and 12th Plans from which power is to be sourced will be commissioned on schedule. It is pointed out that past experience of actual Plan achievement reveals that commissioning has been only to the extent of 50% or so of the total capacity planned. Moreover, thermal capacity to be added in the 11th and 12th Plans would largely be based on super critical technology and the overall shortage of such equipment may increase the likelihood of slippage. In additional filings of 18.9.2008, the petitioner has revised the projections of peak availability to 14030, 15509 and 17526 MW in the years 2013-14, 2014-15 and 2015-16. On that basis, the average surplus in the 3 years from 2013-14 to 2015-16 would only be 21% approximately. If, on the other hand, Plan achievements are more or less in line with previous performance, the projected surplus availability will actually convert into a deficit in so far as the State is concerned. It has also been pointed out that even in the event of Punjab becoming surplus in power during the period in reckoning, the country as a whole is still likely to face a deficit of nearly 14000 MW by the end of 12th Plan and there should be no difficulty in selling the surplus power, if any.
   
   The Commission observes that the figures of peak availability taken into account by the petitioner are based on supply being sourced from as many as 55 projects that are slated for completion in the 11th and 12th Plan periods. In the light of the actual performance in the 8th, 9th and 10th Plans, it would be unrealistic to assume that all projects to be completed in the 11th and 12th Plans would actually come on stream. Even if they do so, it is evident that there would still be a deficit of power at the national level and surplus capacity available can be taken care of by sale of power on advantageous terms. Moreover, a moderate surplus is in any case envisaged in the National Electricity Policy by way of a spinning reserve of at least 5%. Taking all these aspects into consideration, the Commission sees no difficulty in approving the setting up of additional capacity in the range of 2400 (± 10%) MW by GPL.
   
   
5. The Commission notes that para 3.2 of the guidelines stipulates certain tasks to be completed and time lines therefor. GPL has sought the deviations in adhering to the time lines for environmental clearance, fuel arrangements and supply of data for preparation of detailed project reports. The Commission’s findings on each of these issues are discussed below:
   
   
   1. Environmental Clearance :
      
      As per the Guidelines, the Rapid Environmental Impact Assessment (EIA) report should be available before the publication of the RFQ and the proposal for environmental clearance must be submitted to the concerned authority before issuance of the RFP. The petitioner has submitted that the expected date for completion of both these activities will be two months before the RFP is submitted. The Commission observes that non-availability of the Rapid EIA report before publication of the RFQ would not in any way jeopardize the bidding process and thus allows the deviation with the stipulation that this report shall be forthcoming before the RFP issues. Once the Rapid EIA report is forthcoming, there would be no occasion to further delay submission of environmental clearance proposal to the concerned authority. The Commission, therefore, does not see any reason to permit deviation in this respect.
      
      
   2. Fuel Arrangements :
      
      The guidelines provide that fuel linkage or allocation of coal mine(s) would be available before publication of the RFQ. The petitioner has indicated that fuel arrangements for the proposed power station will be firmed up 3 months before submission of RFP. Taking into account the possibility that additional time may be required for a final decision in this respect, the Commission is of the view that even though fuel tie-up is a significant milestone, it should not be necessary to hold up the initiation of the bidding process only on this account. Accordingly, the Commission allows this deviation to the extent that this activity be completed before issuance of RFP.
      
      
   3. Data for Detailed Project Report :
      
      The Guidelines require that the requisite hydrological, geological, meteorological and seismological data necessary for preparation of the Detailed Project Report (DPR) be made available before issue of RFP while the petitioner intends to do so two months before the submission of RFP by the bidders. The Commission is of the view that availability of the basic data is an essential prerequisite and any deviation on this account will be prejudicial to the bidding process. As such, the Commission is not inclined to allow any deviation on this account.
   
   
6. The petition is disposed of, accordingly.
   
   
   
   

   Sd/-	Sd/-
   (Satpal Singh Pall)	(Jai Singh Gill)
   Member	Chairman

   
   
   
   Place: Chandigarh
   Date: September 22, 2008