In a significant initiative towards augmenting power supply across the country, the Centre has relaxed Case - I bidding norms (where state governments invite bids from companies for power transmission and bidders have to source power for it at the cheapest possible tariff), by removing the ceiling on the number of bidders states can invite.
In addition to this, the states have also been allowed to sign power purchase agreements (PPAs) with successful bidders having relaxed time periods. Unlike till now, when the PPAs between states and bidders had to be for a period of 25 years, this time frame can be anything be between seven to up to 25 years. Also the states have been allowed by the Union Power Ministry to even alter the eligibility criteria of the prospective bidders, as per their respective requirements.
The changes in Case - I bidding norms have been made by the Power Ministry after consultations with states, who have for long been advocating greater say in the matter with the aim of seeking power based on their needs and suitability, sources privy to the development confirmed to The Pioneer. Also the decision has come at a time when according to industry sources, states are planning to invite bids worth 7,500 mw in the next three years under Case - I criteria.
According to highly placed Government sources, the states can make these changes only after modifying the standard bidding document for Case - I bidding. And most significantly these modifications can be made by the states only after seeking the prior approval of their respective State Electricity Regulatory Commissions (SERCs). The relaxations in the norms will go a long way in helping state governments invite bidders as per their own requirements, and without the Centre dictating terms to them.
Till now, the PPAs had to be compulsorily for 25 years and even if a state’s requirement got fulfilled within a few years, say 15 years, it had to continue with the pact due to contractual obligations. Now the PPAs can be anywhere between seven to 25 years and even a seven to 10 year PPA will be termed as a long term agreement. Also the Centre earlier had capped the number of bidders under Case - I at not more than seven. Now the states can call more than seven bidders. Moreover they can even alter the eligibility criteria of the prospective bidders, keeping in mind their respective requirements.
Case - I bids are those where the quantum and time period of power procurement is known but as far as fuel type, source and location of the plant is concerned, these are not specified, and the bidder has to ensure from where it will source power and set up the plant for doing so. Under Case - II bidding, the developer or the bidder bids on the basis of specific fuel and location where the details are provided by the Centre or the State Government, whosoever is inviting bids.