SCO NO. 220-221, SECTOR 34-A,
Petition No. 18 of
2010
Date of Order: 10.09.2010
In the matter of: Petition under
AND
In the matter of: Gidderbaha
Power Limited
Present:
Shri Jai Singh Gill, Chairman
Shri
Satpal Singh Pall, Member
Shri
Virinder Singh, Member
ORDER
1. Gidderbaha
Power Limited (GPL) has filed this
petition seeking approval of deviations from the “Guidelines for Determination
of Tariff by Bidding Process for Procurement of Power by the Distribution Licensees” issued by the
Ministry of Power, Govt, of India through Notification No.23/11/2004-R&R
Vol.II dated 19.1.2005 hereinafter referred to as the Guidelines. The
petitioner company has been incorporated under the Companies Act 1956 as a
wholly owned company of Punjab State Power Corporation Limited (PSPCL) which is
one of the successor entities of the Punjab State Electricity Board. GPL
is a Special Purpose Vehicle (SPV) for the establishment of a coal based
thermal power plant with a gross
capacity of 2640 MW to be set up at village Ghagga, District Mukatsar (Punjab)
on build own and operate (BOO) basis
hereinafter referred to as the Project.
2. The
petitioner has sought approval of the following deviations from the guidelines:
(i)
To provide the
fuel linkage for the Project upto 2 months before the last date of submission
of RfP bids.
(ii)
To allow sale in
the market of 30% of the contracted power of the Project available at the Bus
bar.
(iii)
To allow
necessary changes in various clauses of the RfQ, RfP and PPA documents to
reflect sale of 30% of the power
available at Bus bar, in case the deviation sought in clause (ii) above is
approved.
3. The
petition was taken up for hearing on 18.5.2010 and 15.6.2010. The petitioner
sought time for submitting additional information which was filed on 11.6.2010
and 2.7.2010. Arguments have been heard. The petitioner has reiterated the
submissions made in the petition and subsequent filings.
4. Before
considering the question of deviations sought by GPL, it is first necessary to
decide whether the proposed procurement of power is justified in terms of para
3.1 of the MoP Guidelines taking into account the revised commissioning of the
project in 2015-16. 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 as per 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 2015-16, the Commission needs to look at the total energy
available in the years 2016-17, 2017-18 and 2018-19 and compare that with
demand projections based on the latest (17th) EPS. In the data
furnished, surplus power of 2079 MW, 1838 MW & 1258 MW in the years
2016-17, 2017-18 and 2018-19 respectively has been projected. The Commission is
inclined to reiterate its decision in Petition No.16 of 2008 wherein despite
availability exceeding the demand, the setting up of additional capacity in the
range of 2400 (± 10%) MW had been approved while observing that the figures of
peak availability taken into account by the petitioner included supply being
sourced from as many as 55 projects that were slated for completion in the 11th
& 12th plan periods. It was also noted that in the light of the
actual performance in the 8th, 9thand 10th
plans, it would be unrealistic to assume that all projects to be completed in
the 11th & 12th plan would actually materialize. It
was further observed that even if they do so, it is likely 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%. With the
project now expected to be operational in 2015-16, the Commission notes that
the uncertainty in the availability of additional power would, in fact, increase
as more projects would be in the pipeline between 2012-13 to 2015-16. 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. With
regard to the prayer seeking deviation in respect of time line for intimation
of fuel linkage to the bidders, the petitioner has stated that it has in April 2008
applied for the allocation of a 12.8 Million Ton per annum coal mine for the
project to the Ministry of Coal, Govt. of India and that the Central
Electricity Authority has recommended the same for projects to be taken up in
the 12th Plan. This application is likely to be taken up in the
meeting of the Standing Linkage Committee of the Ministry of Coal to be held in
the near future. Para 3.2 of the Guidelines stipulates certain tasks to be
completed and time lines therefor while GPL has sought a deviation in its
prescription relating to fuel arrangements. The Guidelines envisage that fuel
linkage is to be finalized before publication of the RfQ while the petitioner
seeks relaxation to the extent that fuel arrangements will be firmed up 2
months before submission of RfP. The Commission had, in its Order dated
22.9.2008 where a similar deviation had been sought by GPL, taken 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 had allowed this deviation only to the extent that
this activity be completed before issuance of RfP. The Commission reiterates
its earlier view and accordingly allows this deviation to the extent that this
activity be completed before issuance of RfP.
6. Further,
the petitioner has prayed that 30% of the contracted capacity available at Bus
bar may be allowed to be sold by the seller in market as merchant sale to any
third party/parties for the period of PPA. The petitioner has submitted that allowing
this will make the project more attractive for the bidders as the seller would
have the dual benefit of steady price on long term basis by sale of electricity
to the procurer and market determined price through merchant sale. With the
demand supply deficit expected to continue in the country in the short to
medium term, private developers are likely to prefer the merchant sale model.
Accordingly, the petitioner contends that allowing merchant sale may result in
a decrease in the quoted tariff which will benefit the consumer at large.
7. During
the course of hearing, the petitioner was asked to submit details of projects
where merchant sales had been permitted and the lowest tariff quoted as a
result thereof. GPL did not furnish the
requisite details. However, the Commission observes that the Prayag Raj, Sangam
and Jhajjar projects located in U.P. and Haryana wherein merchant sale to the
extent of 10 to 15% was allowed have resulted in tariffs between Rs.2.97 to
Rs.3.02 per KWH. The Commission notes that the tariff obtained in the recently
bid thermal power stations at Talwandi Sabo and Rajpura is Rs.2.86 and Rs.2.89
per KWH with 100% of the contracted capacity being available to the procurer in
both these projects. On the basis of data, the Commission is unable to conclude
that permitting merchant sale upto 15% has resulted in significantly lower
tariffs. However, the Commission notes that the National Tariff Policy suggests
that a part of new generating capacities (say 15%) may be sold outside long
term PPAs with a view to increase the depth of the power markets and providing
alternative for generators and licensee/ consumers which in the long run would
lead to reduction in tariffs. It is also relevant to note at this stage that a
comparison of the power supply position on the basis of the peak demand projected
in the 17th EPS and the power availability (after allowing a 30%
merchant sale to GPL) results in a surplus ranging from 1258 MW to 2079 MW
between 2016-17 and 2018-19. Even though the actual power availability is
subject to the timely completion of the projects in the pipeline, yet the
overall position indicates that there is a scope to allow merchant sale upto a
limited amount as it is likely to provide more comfort to the bidder and might
result in lower tariff which is beneficial to the consumers of the State.
8. Keeping
the above in mind, the Commission deems it expedient to permit merchant sale to
GPL only upto 15%, outside the long term PPA between GPL and the procurer.
9. The
petition is disposed of accordingly. GPL may effect minimal and need based
amendment in the standard bidding document to the extent of aforementioned
deviations that have been allowed.
Sd/- Sd/- Sd/-
(Virinder
Singh) (Satpal Singh Pall) (Jai Singh Gill)
Member Member Chairman
Dated : 10.09.2010