Apex industry body ASSOCHAM today submitted its recommendations and detailed views vis-à-vis ‘proposed draft version of model power purchase agreement (PPA) for public-private participation (PPP) in generation of electricity’ to the Ministry of Power.
In a communication to the power minister, Dr. M. Veerappa Moily, The Associated Chambers of Commerce and Industry of India (ASSOCHAM) has raised serious concerns over introduction of a design, finance, build, operate and transfer (DFBOT) model for power generation.
“We’ve recommended the government to do away with DFBOT model considering there has been no precedent of using such a model for power generation in the first place,” said Mr D.S. Rawat, secretary general of ASSOCHAM. “Besides, its introduction would force the concessionaire to resort to balance sheet financing, thereby exposing the sponsor company to liquidation risks and significantly increasing the debt costs.”
After consulting all its members and concerned stakeholders, ASSOCHAM has recommended that government should address the issues in the standard bidding document (SBD) in its present form itself rather than changing its character altogether.
ASSOCHAM has also said that if this PPA is made existent, it would give a huge setback to the private sector’s morale, more so as private players are expected to contribute over half of the total power generation capacity addition targeted for the 12th Five Year Plan.
“This would prove to be a major hurdle in augmentation of the generation capacity of 88,537 mega watt (MW) in the next five year years as envisaged by the power ministry,” said Mr Rawat.
Terming it as a ‘scary scenario,’ ASSOCHAM has said that as per the draft PPA it is inferred that monopoly of Coal India in India’s coal sector shall continue vehemently for next three-four decades and India would keep facing severe coal shortage as it is in the present scenario.
“After going through the draft PPA, we conclude that there shall be no power sector reforms in line with the Electricity Act 2003 for several years and distribution sector would continue to be the state government’s monopoly,” said Mr Rawat. “Besides, there shall be no privatisation, no splitting and no listing in the distribution sector either.”
Keeping in mind these and a plethora of other significant issues, ASSOCHAM has urged the government to connect and involve all the stakeholders while finalising a model PPA.. (NSS)