Govt issues norms for power procurement on FOO basis, suggests making PFC nodal agency

New Delhi: The government has released guidelines for the procurement of power on Finance, Own and Operate (FOO) basis under SHAKTI policy for a group of states and has suggested making PFC Consulting Limited a nodal agency for undertaking the process. In a gazette notification issued on October 20, the Ministry of Power has said that power requirement of a group of states can be aggregated and procurement of such aggregated power can be made by an agency designated by Ministry of Power or authorised by such states on the basis of tariff based bidding.

Although the provision is already spelled out in Para B(v) of SHAKTI policy, the government has just issued the guidelines to put the provision into practise.

PFC Consulting Limited or a nodal agency chosen by states can conduct bidding

"PFC Consulting Limited, a wholly-owned subsidiary of Power Finance Corporation Limited has been designated as the Nodal Agency by Ministry of Power for the purpose of procurement of power under para B(v) of SHAKTI Policy. Alternatively, a group of states may also appoint a Nodal Agency of their choice," the Ministry of Power has said.

The nodal agency will be responsible for conducting the bid process for procurement of power under para B(v) of the SHAKTI Policy under tariff-based competitive bidding in accordance with these guidelines, it added.

"The Nodal Agency shall aggregate the requirement of power of a group of states for medium-term or long-term basis in terms of quantum (MW) and duration (period), including the date of commencement for supply of power. The Nodal Agency may also initiate procurement of long-term or medium-term power for a group of states based on broad demand assessment on the basis of consultation with states," the government has said.

Nodal agency to work out coal requirement for power demand

Based on the quantum and period of power to be procured, the nodal agency shall work out the quantity of domestic coal required on the basis of CEA norms and the estimated commencement date of supply. The Ministry of Power shall send the request for coal requirement along with duration and estimated date of commencement of coal supply to the Ministry of Coal for further consideration.

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"Sources of coal shall be identified by the Coal India Ltd and /or any of its subsidiary or Singareni Collieries Company Ltd as per requisition received from the Nodal Agency and letter of intent shall be issued to the Nodal Agency," said the Power Ministry.

Two-stage bidding process

The bidders shall be required to submit separate technical and price bids. The price bid shall include offer of total capacity and source-wise tariff up to three decimal places. It shall also specify the minimum capacity that the bidder is willing to accept in case bid evaluation leads to allocation of capacity lower than that offered by the bidder.

For procurement of electricity under these guidelines, the tariff shall be paid and settled for each payment period (not exceeding one month). A multi-part tariff structure with separate Fixed Charge and Variable Charge components of tariff shall form the basis for bidding, the document said.

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