+
Min of Power: PSUs can exit loss-making contracts
POWER & RENEWABLE ENERGY

Min of Power: PSUs can exit loss-making contracts

The Ministry of Power has allowed central power sector agencies such as SJVN, NTPC and NHPC to sell power relinquished by state discoms to new buyers under long or short term contracts or place the surplus power on exchanges for the discovery of price in the day ahead, term ahead and real-time markets.

The move is expected to offer new avenues to central generating stations (CGS) who could now find buyers with better paying capacity for power relinquished by state discoms that have delayed payments to power generators.

Currently, total dues owed by electricity distribution companies to power producers took a steep slope to reach closer to Rs 1.40 lakh crore, reflecting deep stress in the electricity sector.

In a set of guidelines on the distribution of power after the termination of power purchase agreements (PPAs), the power ministry deemed that CGS could sell relinquished power (the capacity that comes out of the PPAs existing with state discoms) under various avenues, including tie-up with another buyer willing to go in for long-term, medium-term (up to 5 years) or short-term PPAs through competitive bidding route. This power could also be sold through power exchanges and also reallocated to willing buyers.

The new guidelines, which have been framed after extensive discussions with the state governments and stakeholders, have accorded the first right to refusal to state and discoms with which CGS had PPA earlier.

Willing discoms have to be allocated the desired quantity of power by generators even after the term of a PPA ends (about 25 years in most cases) on priority. An outside sale could only be made after original PPA holders for the quantity of power give a no-objection certificate (NOC).

The guidelines further state that either party would have to give six months notice indicating their decision to exit from a PPA. This means that in cases where PPA is set to expire in the near future, a six-month advance notice will have to be given by the state or discoms and where a 25 year PPA has already expired, again the state will have to give six months notice to CGS indicating their decision to exit.

In all cases of relinquishment of tied up power, regulatory approval would also be needed to see whether the discoms forgoing their share of power are able to meet the energy needs of the state. Such proposals would go through only after state or discoms clear all past dues.

Once relinquished by the state, any share of CGS will not be allowed to be taken back by the state under the same PPA conditions, the guideline states.

For nuclear power generating plants, the mechanism of relinquishment of power after the completion of the term of PPA will only be decided by the Department of Atomic Energy.

The new guidelines are expected to bring more clarity on continuation tied up power and give flexibility to both CGS and state to undertake future contracts based on economic principles and needs.

Image Source


Also read: ICRA maintains negative outlook on power distribution sector

Also read: Ministry of Power Signs Pact with Three State-Run Utilities

The Ministry of Power has allowed central power sector agencies such as SJVN, NTPC and NHPC to sell power relinquished by state discoms to new buyers under long or short term contracts or place the surplus power on exchanges for the discovery of price in the day ahead, term ahead and real-time markets. The move is expected to offer new avenues to central generating stations (CGS) who could now find buyers with better paying capacity for power relinquished by state discoms that have delayed payments to power generators. Currently, total dues owed by electricity distribution companies to power producers took a steep slope to reach closer to Rs 1.40 lakh crore, reflecting deep stress in the electricity sector. In a set of guidelines on the distribution of power after the termination of power purchase agreements (PPAs), the power ministry deemed that CGS could sell relinquished power (the capacity that comes out of the PPAs existing with state discoms) under various avenues, including tie-up with another buyer willing to go in for long-term, medium-term (up to 5 years) or short-term PPAs through competitive bidding route. This power could also be sold through power exchanges and also reallocated to willing buyers. The new guidelines, which have been framed after extensive discussions with the state governments and stakeholders, have accorded the first right to refusal to state and discoms with which CGS had PPA earlier. Willing discoms have to be allocated the desired quantity of power by generators even after the term of a PPA ends (about 25 years in most cases) on priority. An outside sale could only be made after original PPA holders for the quantity of power give a no-objection certificate (NOC). The guidelines further state that either party would have to give six months notice indicating their decision to exit from a PPA. This means that in cases where PPA is set to expire in the near future, a six-month advance notice will have to be given by the state or discoms and where a 25 year PPA has already expired, again the state will have to give six months notice to CGS indicating their decision to exit. In all cases of relinquishment of tied up power, regulatory approval would also be needed to see whether the discoms forgoing their share of power are able to meet the energy needs of the state. Such proposals would go through only after state or discoms clear all past dues. Once relinquished by the state, any share of CGS will not be allowed to be taken back by the state under the same PPA conditions, the guideline states. For nuclear power generating plants, the mechanism of relinquishment of power after the completion of the term of PPA will only be decided by the Department of Atomic Energy. The new guidelines are expected to bring more clarity on continuation tied up power and give flexibility to both CGS and state to undertake future contracts based on economic principles and needs. Image Source Also read: ICRA maintains negative outlook on power distribution sector Also read: Ministry of Power Signs Pact with Three State-Run Utilities

Next Story
Real Estate

DLF Returns to Mumbai with Premium Andheri Residential Project

Delhi-NCR based real estate major DLF announced its return to the Mumbai market on 17 July with the launch of its premium residential project, The WestPark, in Andheri. The first phase includes 416 apartments spread across four towers, with two towers launched on the announcement day. The company plans to invest over Rs 8 billion in the project and expects a topline exceeding Rs 20 billion from Phase 1.“We have launched two towers and, given the strong response, plan to unveil the remaining two towers ahead of schedule, within the next few days,” said Aakash Ohri, Joint Managing Director o..

Next Story
Infrastructure Urban

APCRDA Advances Net Zero Goal with IGBC Training for Officials

In a significant stride towards Andhra Pradesh’s Net Zero target by 2040 and the Swarna Andhra 2047 vision, the Andhra Pradesh Capital Region Development Authority (APCRDA), in partnership with the Indian Green Building Council (IGBC), conducted a high-level capacity-building programme for senior officials in Vijayawada on Friday.Held at a city hotel, the session saw the participation of over 50 senior APCRDA officials, including the Engineer-in-Chief, Chief Engineer (H&B), Director (Planning), Director (Environment), and heads of key departments. The training centred on IGBC’s Green B..

Next Story
Infrastructure Energy

Assam Solar Project Halted as Waaree EPC Contract Is Cancelled

Following the Assam government’s withdrawal from its proposed solar project, the Engineering, Procurement, and Construction (EPC) contract awarded to Waaree Renewable has been suspended. Waaree Group’s EPC division informed the stock exchange of this development through a regulatory filing.The Assam solar project was suspended due to funding challenges, which rendered the initiative unviable for the state government. Waaree Renewable Transmission Limited (RTL) explained that the Government of Assam has withdrawn the project’s funding via the Asian Development Bank (ADB) loan. Consequentl..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?