For the power sector,it could well be a case of one step forward and two steps back. The revised standard bidding document readied by the government covering projects offered to developers under what is termed the case II bidding route that was followed for awarding the Ultra Mega Power Projects seeks to drastically alter the basic framework under which power projects are offered to developers currently. This is being done in an attempt to push through with the competitive bidding experiment,which is on shaky ground in the wake of numerous defaults by developers of upcoming projects.
What needs to be noted is that the Electricity Act 2003,as it exists now,allows the regulator to determine tariffs,alongside the option for market discovery of tariff through the competitive bidding route. In 2006,the government adopted a Tariff Policy that overtly favored competitive bidding. In the standard bidding documents or SBDs evolved at that time,the fuel risk was passed on to the developer,even though in the case of regulated tariffs,fuel cost was entirely pass through (or allowed to be recovered from the consumer). Six years down the line,this preference for bidding has run into rough weather,with a number of long term power purchase agreements including Tatas Mundra UMPP and Reliances Krishnapatnam UMPP running into dispute. Added to the problem is that fact that ostensibly to develop the market,coal mines and coal linkages were offered to private developers,most of whom are making a killing by selling electricity in the short term market.
Anil is a Senior Editor based in New Delhi.
anil.s@expressindia.com
