New power project bidding norms to have ‘risk mitigation’ steps

Amid electricity producers facing issues with fuel price volatility, government is looking to ensure necessary “risk mitigation” measures are in place for upcoming projects where location and fuel are already decided. The Power Ministry has finalised the changes to Case II competitive bidding norms for new projects. In Case II, the location of the project and fuel to be used are already decided before start of competitive bidding. The revised guidelines would be in place once it is approved by the Empowered Group of Ministers (EGoM) headed by Defence Minister A K Antony. “We will focus on risk allocation and risk mitigation measures (in revised Case II bidding norms)… In the new bidding norms, we will try to balance risks faced by power producers and power procurers,” a Power Ministry official said. The official did not elaborate on whether higher fuel costs would be made pass through to the consumers. With significant volatility in fuel prices, especially in imported coal costs, many power generators are adversely impacted since they don’t have the option to pass through the higher costs to end consumers.

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