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Home News Power Sector News Power developers to get two extra years to ink PPAs

Power developers to get two extra years to ink PPAs

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GeneratorIn a move that could offer a fillip to an estimated 32,330 MW of power generation capacity, mega project developers have been given the leeway of two extra years — beyond the current stipulation of three years — to ink power purchase agreements (PPAs) with state electricity distribution companies in order to continue importing equipment duty-free.

The move is expected to speed-up the commissioning of 25 mega power generation projects, including those of GMR, Jindal Power, GVK and Hinduja, most of which are in advanced stages of completion.

Currently, a mega project developer gets a provisional permit from the department of revenue allowing customs and excise duty waiver for 36 months. Within this time frame, the developer is required to submit the final mega power status certificate, including a PPA having been signed for 85 per cent of its capacity with discoms — a mandatory condition for acquiring mega power status.

However, the process of signing the PPA has been a major challenge for private project developers as state governments' response to buying power through tariff bidding has "not been encouraging" despite several missives by the power ministry.

Further, the lack of requisite documents for carrying out the bidding process (for both Case I and Case II bidding) had not been ready so far, because of which states have been dragging their feet on the issue.

"In recent years, state discoms have not come up with enough bids for power purchase thereby not providing adequate opportunities to provisional mega power project developers to tie up power as per the Mega Power Policy," the power ministry has said, justifying its request seeking an extension of the deadline.

In the last two years, Rajasthan, Uttar Pradesh and Andhra Pradesh were the only states to seek tariff bids for power purchase, of which only UP and AP finalised some bids for part-capacities, it said.

"Since the above issues are beyond the control of the developer, it has been decided in the power ministry to give a fair chance to developers and grant maximum time period of 60 months from the existing 36 months..." the ministry's request to the revenue department said.

source- Indian Express


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