Bidding puts PSUs in a spot

Public sector power projects that have enjoyed favoured treatment from the state government till now are in for trouble. The Central Electricity Regulatory Commission has ruled in favour of shifting to a tariff-based competitive bidding regime for power projects from January 2011, citing better price discovery and lower retail tariffs.

This means APGenco projects too must participate in the bidding process and APTransco will buy from it when the price is competitive.This comes as a blow to all public sector power utilities, which have been lobbying for an amendment to the Centre’s Tariff Policy to permit continuation of the present cost-plus tariff structure for public sector undertakings beyond the January deadline. There were similar requests from other state-owned firms like NHPC Ltd and Satluj Jal Vidyut Nigam Ltd.

The state is not willing to accept the CERC ruling, stating that public sector power companies are run in a different way and fulfil certain social objectives. “We will ask for some more time to examine the issue,” said a senior Genco official.Srisailam, Nagarjunasagar, Jurala, and Machkund hydro-stations in the state will be exempt from the competitive bidding as they are used as peaking power stations.