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| Edited By: Neeraj Thakur |Source: DNA |Updated: Mar 19, 2018, 02:32 AM IST
The State Bank of India (SBI) and ICICI Bank have criticised the draft of the new standard bidding document (SBD) for the power sector.
SBI, India’s largest lender, in its letter to the ministry of power, has raised concerns over eight changes introduced to SBD.
These include the introduction of capacity charge as a bid criteria, which, SBI said, may lead to some plants missing the merit order of despatch despite quoting low capacity charge.
SBI has requested the ministry to make some changes in the existing SBD, instead of introducing a new document to improve the bankability of projects.
ICICI has, on the other hand, raised concern over the change in the model power purchasing agreement (PPA) wherein, it has been proposed that the power station should be constructed on design, build, finance, operate and transfer (DBFOT) instead of erstwhile documents based on build, own, operate and maintain basis.
“The proposed DBFOT structure is more suited to tolling projects for civic/public services e.g roads , where grants are provided by concessioning authority and financial health and statutory constitution of concessioning authority is robust. However, power projects are typically intensive based on non recourse funding from lenders and clear security rights are considered necessary for providing lenders’ comfort for financing, as in the absence of security over projects assets and mortgage of land, the proposed financing may tantamount to ‘unsecured lending,” read the ICICI letter to the ministry.
Bids for power procurement are sought in two ways. Under Case 2 bidding, resources such as land, fuel and water linkages are identified and in some cases also provided to the developer quoting the lowest tariff.
In Case 1, the quantum and time period of power procurement is identified, but fuel type, sources and the plant location are not specified.
