There is scope to enhance the magnitude of the “Medium Term PPA Scheme” recently announced by the Union power ministry, according to Rajeev Sharma, Chairman & Managing Director, Power Finance Corporation Ltd. He was addressing the media at a recent press conference in Mumbai.
Sharma asserted that the response to the scheme has been very encouraging, going by the pre-bid meeting that was held during the second week of May 2018. With RfQs expected to be opened on June 12, 2018, the tentative time frame for signing of the PPAs is mid-July 2018, the PFC CMD said. The PPAs will be signed for a period of three years.
The Medium Term PPA Scheme aims at helping developers with commissioned power generation projects but without firm power purchase agreements. The government has targeted to sew up three-year PPAs for a total capacity of 2,500 mw. Sharma observed that there was tremendous scope to scale up this limit through more instances of this scheme in future.
Explaining the modalities, Sharma said that PFC Consulting Ltd, a wholly-owned subsidiary of PFC, will be the nodal agency for the project, while PTC India will sign the power procurement agreement with the successful bidders (generators), and the power supply agreement with the discoms (the ultimate power purchasers). Rajeev Sharma said that discussions have been successfully held with state power distribution companies and the potential demand for this 2,500 mw has been created.
The bidding will be conducted on the DEEP e-bidding portal. Based on the bids received, the “L1” (lowest tariff) will be determined and all power producers will need to match this tariff. There will be no reverse auction. The tariff will be fixed for a period of three years, without any escalation. The tariff will also have a fixed component of Rs.0.01 per unit (kwh). Under the scheme, a single entity can be allotted maximum capacity of 600 mw, in lots of 100 mw. The scheme assures a minimum off-take of 55 per cent of contracted capacity.
The PFC CMD also said that schemes like “Saubhagya” are expected to create additional demand to the tune of 28,000 mw. This will result in several power generation projects that are currently operating at low PLFs or are stranded, to revive. PFC also has some non-performing assets (NPAs) in its portfolio in the form of power generation projects that are stressed for various reasons. However, Sharma was optimistic that over the next 3-5 years, when power demand rises, such power generation projects would turn into “gold mines.”
Of PFC’s total loan portfolio of Rs.2,80,000 crore, around 11 per cent (Rs.31,000 crore) represented “stressed” assets. Interestingly, all this came from private projects. There is no stress on from government-owned projects, asserted Sharma. The “stressed” loan portfolio corresponds to an installed capacity of 18,400 mw, out of which around 10,000 mw was commissioned, noted Sharma.
