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Publish Date : 08-May-2015

The Centre has announced amendments to the guidelines and standard bidding documents for procurement of electricity from thermal power stations on design, build, finance, own and operate (DBFOO) basis, in a move to promote competition in the power sector.

In order to decentralise decision-making process, any deviation from the standard bidding documents for Case-I power projects will have to be made by the distribution licencees with the permission of the appropriate commission, instead of the central government.

Case-I is an open bid, where the developer is required to decide for fuel and location and compete against any other developer in general. On May 5, the power ministry issued the amended guidelines to enable utilities to use the standard bidding documents for inviting tariff-based bids for supply of electricity to those who are being notified.

Earlier in January 2005, the ministry had issued guidelines for the procurement of power by the distribution licencees, which were subsequently amended in November 2013.

According to the amendments, in order to facilitate competition, the existing provision of restriction of maximum seven bidders in model request for qualification (RFQ) has been removed. Citing the change in coal policy, wherein concessional coal is available, the contract period for long-term procurement has been changed from the existing 25 years to 7 years and above up to a period of 25 years from the date of commencement of supply of power with provision of extension of five years at the option of either party as per the power supply agreement.

The provision in regards with additional generation capacity has also been deleted in the DBFOO document, in order to allow developers to install any additional capacity without requiring consent from the procurers.

The power ministry said, in DBFOO model, land, water, fuel and other project related clearances should be obtained by the project developer only. Thereafter, taking prior approval for expansion and creation of additional capacity from all the procurers of various capacities tied up from the same project will be practically very complicated and unnecessary.

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