Cautioned by spot power prices rising to record levels due to coal shortage at power plants in the last summer, states have started making arrangements to tie up power supply agreements on a short-term basis right from the beginning of the new year.
Four such auctions have already been conducted this year, through which Uttar Pradesh and Maharashtra seek to tie up a cumulative 2,850 MW capacity for May and June, 2019. Stressed power projects, vying for new avenues of electricity sale, were among the lowest bidders.
The tariffs quoted by power producers against such bids range between Rs 5.09/unit-Rs 7.49/unit.
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According to sources, stressed power assets such as the 1,320 MW Jaypee Nigrie plant and the 1,200 MW Essar Mahan unit are among the lowest bidders to Uttar Pradesh and Maharashtra’s invitations for bilateral power contracts. Coastal Energen’s 1,200 MW Mutiara plant, another stressed unit, has also been shortlisted for meeting Uttar Pradesh’s requirements.
Chhattisgarh has also invited 500 MW short-term capacity cumulatively for January and February. Adani Power’s Mundra plant is one of the lowest bidders to these tenders, sources added.
Though there are instances where the bids have been cancelled by discoms due higher prices, experts have pointed out that the aforementioned tariffs — though higher than the average electricity rates — would insulate the discoms from the pricing vagaries at electricity exchanges. Last year, spot prices of electricity breached the Rs 10/unit several times in these months due to surge in electricity demand and coal supply issue at a number of power plants.
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To be sure, prices of short-term power depends on a number of seasonal and durational factors. Rates are usually higher if the requirements are for few hours in the day. The states would procure electricity on such short-term basis through various power traders. “States would want to keep themselves equipped with ample power generation capacity during the elections,” an industry veteran said on conditions of anonymity.