1st Slide

Presentation
on
Power Procurement
Under
Competitive Bidding guidelines
2nd Slide
Section-61 and Section-62 of the Electricity Act-2003 stipulates for Tariff regulation and
determination of Tariff of Generation, Transmission, wheeling and retail sale of
electricity by the Appropriate commission.
Section-63 of Electricity Act states that Notwithstanding anything contained in Section62, the appropriate commission shall adopt the tariff if such tariff has been determined
through transparent process of bidding in accordance with the guidelines issued by the
central government.
Competitive Bidding Guidelines have been issued on 19 th January2005 by Ministry of
Power as per Section-63 of Electricity Act.
3rd Slide
Objective of the Guidelines
1.

Promote competitive procurement of electricity by distribution licensees;

2.

Facilitate transparency and fairness in procurement processes;

3.

Facilitate reduction of information asymmetries for various bidders;

4.

Protect consumer interests by facilitating competitive conditions in

procurement of electricity;

5.

Enhance standardization and reduce ambiguity and hence time for

materialization of projects;

6.

Provide flexibility to suppliers on internal operations while ensuring

certainty on availability of power and tariffs for buyers.

4th Slide

Period of Power purchase covered under the guidelines

1.

Long-term procurement of electricity for a period of 7 years and above;

2.

Medium term procurement for a period of upto 7 years but exceeding 1 year.

5th Slide
Types of competitive Bidding
1.

Case-1 Bidding: Where the location, technology, or fuel is not specified by the
procurer

2.

Case-2 Bidding: For hydro-power projects, load center projects or other location
specific projects with specific fuel allocation such as captive mines available,
which the procurer intends to set up under tariff based bidding process.

Approval of the Appropriate Commission shall be sought in event of the deviations from
the bidding conditions contained in these guidelines
6th Slide
Approval required before issue of Enquiry?
Approval of the Appropriate Commission shall be sought prior to initiating the bidding
process in respect of the following aspects:
For the quantum of capacity / energy to be procured, in case the same is exceeding the
projected additional demand forecast for next three years following the year of expected
commencement of supply proposed to be procured. Such demand forecast shall be based
on the latest available (at the time of issue of RFQ) Electric Power Survey published by
Central Electricity Authority. (Both for Case 1 and Case 2).
For the transfer price of fuel, in case of fuel specific procurement enquiry, if such price
has not been determined by government, government approved mechanism or a fuel
regulator (under Case 2).
7th Slide
Pre Requisites for Case-1 Bidding by BIDDER
a.

The Networth of the bidder shall be equal to or greater than the value calculated
@Rs0.50Cr/MW of capacity offered by the bidder based on any of the last 3
financial years immediately preceding bid deadline.

b.

Other requirements:

1.

Site identification & Land acquisition:

The Bidder should have acquired and have taken possession of at least 50% of the
area of the land as mentioned above. In case of land to be acquired under the Land
Acquisition Act, 1894, the Bidder shall submit copy of notification issued for such
land under Section 4 of the Land Acquisition Act, 1894.

2.

Fuel:
Domestic coal: Bidder shall have made firm arrangements for fuel tie up either by
way of mine allocation or fuel linkage for the total installed capacity for the term
of the PPA.
Imported coal: Bidder shall have either acquired mines having proven reserves for
at least fifty percent (50%) of the quantity of coal required to generate power from
the power station for the total installed capacity OR shall have fuel supply
agreement for at least fifty percent (50%) of the quantity of fuel required for a
term of at least five (5) years or the term of the PPA (which ever is less) to
generate power from the generation source for the total installed capacity for the
term of the PPA.
In case of domestic gas, the Bidder shall have made firm arrangements for fuel tie
up by way of long term fuel supply agreement for the quantity of fuel required to
generate power from the generation source for the total installed capacity for the
term of the PPA.
In case of RLNG, the Bidder shall have made firm arrangements for fuel tie up by
way of fuel supply agreement for at least fifty percent (50%) of the quantity of
fuel required for a term of at least five (5) years or the term of the PPA (which
ever is less) to generate power from the generation source for the total installed
capacity for the term of the PPA.

3.

Water: The Bidder shall have acquired approval from the concerned state
irrigation department or any other relevant authority for the quantity of water
required for the power station.

4.

Environmental Clearance: The Bidder shall have submitted the requisite

proposal, for the environmental clearance, to the concerned administrative
authority responsible for according final approval in the central / state govt. as the
case may be.

5.

Forest Clearance: (if applicable) The Bidder shall have submitted the requisite
proposal, for the forest clearance, to the concerned administrative authority
responsible for according final approval in the central / state govt., as the case
may be.

8th Slide
Pre Requisites for Case-2 Bidding by PROCURER
1.

Site identification and land acquisition:

Notification under section 4 of the Land Acquisition Act, 1894 should have been
issued before the publication of RFQ.
The notification under section 6 of the Land Acquisition Act, 1894 should have
been issued before the issue of RFP.
The project site shall be transferred to the successful bidder at a price to be
intimated at least 15 days before the due date for submission of RFP bids.
The Award under the Land Acquisition Act should have been declared before the
PPA becomes effective.

2.

Environmental clearance for the power station:

Rapid Environmental Impact Assessment (EIA) report should be available before
the publication of RFQ.
Proposal for the environmental clearance should have been submitted before the
concerned administrative authority responsible for according final approval in the
Central/ State Govt., as the case may be, before the issue of RFP.
Environmental clearance should have been obtained before PPA becomes
effective.

3.

Forest Clearance (if applicable):

Requisite proposal for the forest clearance should have been submitted before the
concerned administrative authority responsible for according final approval in the
Central/ State Govt., as the case may be, before the issue of RFP.

4.

Fuel Arrangements:
If fuel linkage or captive coal mine(s) are to be provided, the same should be
available before the publication of RFQ. In case, bidders are required to arrange
fuel, the same should be clearly specified in the RFQ.

5.

Water linkage: It should be available before the publication of RFQ.

6.

Requisite Hydrological, geological, meteorological and seismological data

necessary for preparation of Detailed Project Report (DPR), where
applicable:
Should be available before the issue of RFP. The bidder shall be free to verify
geological data through his own sources, as the geological risk would lie with the
project developer.

9th Slide
Bidding Process

Two stage process involving RFQ and RFP stages in case of Long term
procurement of power under Case-2 bidding.

Either Single stage (combining both RFQ & RFP) or Two stage process in case of
Long term or Medium term procurement of power as per the choice of procurer in
case of Case-1 bidding.

The Bidding process shall follow International Competitive Bidding Guidelines

(ICB).

In Case-1 bidding, the bidder shall quote the price of Electricity at the
Interconnection point i.e where the transmission lines of the generating station
connect to Inter/Intra state transmission network.

Tariffs shall be compared at the Delivery point i.e interface between STU
network with procurers transmission lines.

Transmission charges from Injection point to Delivery point shall be borne by

procurer.

Transmission charges upto the Injection point ( shall mean either the CTU
interface or the Delivery point) shall be borne by bidder.

10th Slide
Information to be provided by Procurer at RFQ stage

Quantum of power with a range and with minimum quantity to bid.

Requirements of base load, peak load and seasonal load if any.

Period of contract (project life considered as 15 years for gas/liquid fuel based
plants, 25 years for coal based plants and 35 years for Hydro plants)

Normative availability requirements.

Expected date of commencement

Delivery point

Construction milestones if applicable

Financial requirements by Bidders such as minimum networth, revenues etc

Model PPA with details regarding risk allocation, technical requirements on

minimum loading, assured offtake, force majeure clauses, lead times for
rescheduling of power, default conditions and penalties, payment security offered
by procurer etc

Bid validity period

Technical requirements w.r.to IEGC/State grid/ABT/CERC/Emission norms etc

Exit options for procurers and for suppliers

11th Slide
Information to be provided by Procurer at RFP stage

The final PPA incorporating all amendments during RFQ stage

Final payment security by procurer

Bid evaluation methodology

Structure of Tariff to be quoted

Adequate Bid guarantee amount to be called for to eliminate non serious bids.

12th Slide
Bid submission, Evaluation and Time Table

For Single Stage bid process

Issue of RFQ/RFP

RFP Submission of Bid

by 75th day.
(Land: Should have taken possession of 50% of the land or Section-4 notification
should have been issued
Proposal for final environmental clearance should have been submitted
Proposal for Forest clearance should have been submitted,
Fuel linkage or allocation of coal mines or fuel supply agreement should be
available
Water linkage approval should be available)

Evaluation of bids and issue of LOI

by 100th Day

PPA becomes effective by

by 120th Day.

Zero date

For Two Stage bid process

Issue of RFQ
Zero date
(Land: Section-4 notification should have been issued
Rapid EIA report for power station should be avaialble
Fuel linkage or allocation of coal mines or fuel supply agreement should be
available
Water linkage approval should be available)

Submission of responses for RFQ

Issue of RFP
by 75th day
(Land: Section-6 notification should have been issued
Proposal for final environmental clearance should have been submitted
Proposal for Forest clearance should have been submitted,
Hydrological, Geological, Meteorological, Seismological data should be
available for preparation of DPR)

RFP Submission of Bid

225th day.

Evaluation of bids and issue of LOI

240th Day

PPA becomes effective by

(Land: The award of land should have been declared

270th Day.

by 45th day

Environmental clearance should have been obtained)

13th Slide
Bid Bond

The bid bond shall be submitted alongwith RFP documents for the stipulated
amount in RFP.

Bid bond shall be valid 30 days beyond the bid validity period.

The bid bond may be invoked if:

Failure to incorporate the project company as a legal entity within 15 days

of issue of LOI.

Failure to furnish Contract performance guarantee within 30 days of issue

of LOI.

Failure to execute RFP documents within 30 days

Bidder submitting wrong information or making misrepresentations in bid

14th Slide
Contract Performance Guarantee (CPG) and Liquidated Damages (LD)

The successful bidder or the lead member of consortium shall furnish a contract
performance guarantee for the value calculated @Rs30 lacs/MW of contracted
capacity within 30 days of issue of LOI.

CPG shall be valid 3 months beyond the scheduled delivery date.

The bid bond may be invoked as per the terms of PPA.

In case of Long term procurement of power, on successful supply of power for a

period of 5 years or half the term of agreement which ever is less, and there is no
seller event of default in the preceding 36 months, the CPG shall be reduced to the
value calculated @Rs15 lacs/MW contracted capacity.

In case of any of conditions specified have not been fulfilled by the Seller within
3 months (for Long term procurement) or within 1 month (for medium term
procurement) after the time specified, then, from the expiry of the period to until
the fulfillment of the conditions specified, the seller shall, on weekely basis,
furnish additional CPG of ------- (as agreed during RFP stage, but not less than
Rs.1.5Lacs/MW of contracted capacity valid till the scheduled delivery period.
However, upon satisfactory fulfillment of all the conditions, the additional CPGs
shall be returned by procurer.

In case of non submission of additional CPGs by seller or in case of non

fulfillment of the all conditions specified within 6 months (in case of long term
procurement) or 2 months (in case of medium term procurement) even after
furnishing of additional CPGs, the procurer shall have the right to terminate.

In case of termination of agreement due to non fulfillment by seller, the seller

shall be liable to pay --------- amount (as agreed during RFP stage, but not less
than Rs.40Lacs/MW of contracted capacity) as Liquidated damages.

In case Seller or procurer is not able to fulfill the conditions specified due to
force majeure conditions, the time period can be extended for a maximum
period of 10 months (for long term procurement) or 2 months (for medium term
procurement)

In case the procurer fails to comply with the conditions specified within the time
period specified, due to reasons other than force majeure/attributable to seller, the
time period shall be extended by a maximum period of 3 months. Thereafter seller
can terminate the agreement.

In case of termination of agreement by seller due to non fulfillment of conditions

by Procurer, the procurer shall pay to seller, as Liquidated damages, 10% of CPG.

15th Slide
Condition to be satisfied by Seller subsequent to signing of PPA
in case of
Long Term Procurement of Power

The Seller shall perform following activities within 10 months (Procurer should stipulate
a minimum period of 10 months)

Seller should have executed a fuel supply agreement and shall provide a copy to
procurer

Seller should have obtained necessary permissions for long term open access and
shall have executed all necessary agreements for transmission of power from
station busbars upto the injection point.

Seller should have obtained necessary permissions for long term open access and
shall have executed all necessary agreements for transmission of power from
Injection point to the delivery point if seller is responsible for the same.

Seller should have acquired and taken possession of the complete land.

Seller shall have awarded the EPC contract or main plant contract for BTG and
shall have given a irrevocable NTP to the contractor.

The seller shall have obtained all clearances, consents, permits required for supply
of power.

The seller shall have sent a written notice to the procurers indicating contracted
capacity and installed capacity for each unit and for the whole power station.

The seller shall have achieved Financial closure and has provided a certificate
from the lead banker

The seller shall have provided a irrevocable letter to the lenders duly accepting
and acknowledging the rights provided to the Lenders under the terms of PPA and
RFP documents.

16th Slide
Condition to be satisfied by Seller subsequent to signing of PPA
in case of
Medium Term Procurement of Power

The Seller shall perform following activities within ------- months (as agreed during RFP
stage)

Seller should have executed a fuel supply agreement and shall provide a copy to
procurer

Seller should have obtained necessary permissions for medium term open access
and shall have executed all necessary agreements for transmission of power from
station busbars upto the injection point.

Seller should have obtained necessary permissions for medium term open access
and shall have executed all necessary agreements for transmission of power from
Injection point to the delivery point if seller is responsible for the same.

The seller shall have obtained all clearances, consents, permits required for supply
of power.

The seller shall have sent a written notice to the procurers indicating contracted
capacity and installed capacity for each unit and for the whole power station.

17th Slide
Condition to be satisfied by Procurer subsequent to signing of PPA
in case of
Long Term or Medium Term Procurement of Power
The Procurer shall perform following activities within ------- months (as agreed during
RFP stage)

Procurer should have obtained necessary permissions for long term or medium
term open access and shall have executed all necessary agreements for
transmission of power from injection point to delivery point if Procurer is
responsible for the same.

Procurer shall facilitate the representation of Seller on interstate/regional

transmission linkages required from injecting point to the delivery point (if Seller
is responsible for obtaining the same)

Procurer should have obtained necessary permissions for Long term or medium
term open access and shall have executed all necessary agreements for
transmission of power from Power station switchyard to the delivery point if the
power station is located within the state of the procurer and STU network is to be
used.

The procurer shall have obtained the order of the commission in the state in which
procurer is located for adoption of Tariff under Section-63 of Electricity act 2003.

18th Slide
Supply of Power

Unless otherwise instructed, the seller shall sell all the available capacity upto the
Contracted capacity to the procurer pursuant to the dispatch instructions given by
procurer.

Seller is permitted to sell the power (part of contracted capacity) to 3 rd parties if

Procurer has not dispatched that part of contracted capacity and such part first has
been offered to other procurers (in case of multiple procurers) who have not
exercised their 1st right to receive within 2 hrs of being offered.

If the procurer does not avail the contracted capacity, the seller is entitled to sell
such capacity to any person without loosing his right to receive Capacity charges
from procurer for such unutilized capacity.

The sale realizations in excess of energy charges shall be equally shared by Seller
and Procurer. During this period, the Seller continues to receive the capacity
charges from procurer.

The sale under unscheduled interchange shall not be considered as sale to 3 rd

party.

The seller shall recommence supply to Procurer within 2 hrs of from receipt of
notice for such unutilized part of contracted capacity.

During the operating period, if the Seller is not able to provide contracted capacity
from the power station, the Seller can supply from an alternative generation
source at same terms and conditions and all additional charges related to
transmission shall be borne by Seller.

Supply from alternative generation source is allowed for a maximum continuous

period of 6 months or a non continuous period of 12 months.

In case seller is not able to perform due to force majeure conditions affecting the
Procurer or Seller or under Procurers event of default, the scheduled delivery
dates can be extended by not more than 12 months (for long term procurement) or
2 months (for medium term procurement) or the date on which seller elects to
terminate whichever is later.

19th Slide
Liquidated damages to be paid by Seller in case of delay in supply

If the Seller fails to commence the supply of power or fails to achieve required
availability, the seller shall pay LD as follows:

LD = CC x d x DR1 where, (for less than or equal to 60 days delay)

CC = Contracted capacity
d = no. of days of delay from the scheduled delivery date
DR1= Rs10,000/MW/day

LD = CC x d x DR1 + CC x (d-60) x DR2 (for more than 60 days delay)

CC =
d =
DR1=
DR2=

Contracted capacity
no. of days of delay from the scheduled delivery date
Rs10,000/MW/day
Rs.15,000/MW/day

The Sellerss maximum liability under LD clause is upto 12 months (for long term
procurement) or 2 months (for medium term procurement).

The seller shall further pay liquidity damages payable by Procurer to CTU / STU
as per the transmission agreements entered by Procurer if any and such LDs shall
not be more than 20% of the LD computed above.

20th Slide
Liquidated damages to be paid by Procurer in case of default by Procurer
Or
in case of Force majeure conditions affecting the Procurer

If the Seller is ready to commence supply of power & has given a due notice but
is not able supply due to Procurers event of default or due to force majeure

conditions affecting the procurer, the LD charges payable by Procurer are as

follows:

Procurer shall make pay the capacity charges for the full contracted
capacity if the delay is due to Procurers event of default.

Procurer shall pay the Sellers Debt services subject to maximum of

Capacity charges in the force majeure events affecting the Procurer for a
period in excess of 3 continuous or non continuous months.

Payments by Procurer to Seller in both the above cases shall be in the form
of increase in capacity charges after commencement of power supply
provided that such increase in capacity charges shall be determined by
appropriate commission.

21st Slide
Transmission Losses

Transmission losses from the Interconnection point onwards would be borne by

the Procurer and power lost on account of transmission loss would be to the
account of Procurer.

22nd Slide
Energy Charges & Capacity Charges