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Setting up of extension units through MOU route challenged
The setting up of additional units through MOU route at thermal projects awarded under competitive bidding has been challenged. This has been done so as the bidding is not serving its purpose.

THE PETITION against setting up of extension units at Talwandi Sabo and Rajpura thermal plants by  Punjab Government through Memorandum of Understanding(MOU) route is to come up for hearing tomorrow before the Punjab State Electricity Regulatory Commission (PRERC). Gurnek Brar, a retired PSEB superintending engineer, has petitioned before PSERC that extension to set up additional units at thermal projects awarded under competitive bidding cannot be given under MOU route.

Punjab State Electricity Board had carried out competitive bidding for 3x660 MW Talwandi Sabo Thermal Power Project and awarded the project to the lowest bidder Sterlite Energy for the power purchase agreement was signed on September 1 2008. PSERC  approved and adopted this competitive bid rate of Rs 2.8643 per unit in January 2009.

Similarly, after competitive bidding for 2x660 MW Rajpura thermal power project L&T Power Development Ltd bid of Rs. 2.89 per unit was accepted power Purchase agreement was signed in January 2010.            

In June 2010 Punjab Government notified the power generation policy under the provisions of this policy; PSPCL signed a MOU in July 2010 with Nabha Power Ltd for setting up one additional unit of 700 MW at Rajpura. Similarly, PSPCL signed a MOU in October 2010 with Talwandi Sabo Power Ltd for setting up one additional 660 MW unit at Talwandi Sabo.

The action of PSPCL cannot be justified on the grounds that extension unit would use common facilities of main project and thus give cheaper generation because of lower cost per MW. However, the developer has been allowed to sell 85% of the capacity as merchant power. Under MOU, 10% of power from new units would be sold to PSPCL at the bid rate of the main project and 5% at fuel cost.

Having awarded the project through lowest bid, the action to allow an additional unit with 85% merchant sale amounts to giving a huge financial benefit to the developer, which was nowhere envisaged in the original documents.   

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