Pilot Scheme for Procurement of Power

Why in News?

The government has launched a pilot scheme to procure 2,500 MW electricity for 3 years under medium-term arrangement from commissioned power plants without power purchase agreements.



About the Scheme

Power Ministry had recently issued the model bid documents, PAPP (Pilot Agreement for Procurement of Power) and PPSA (Pilot Power Supply Agreement) .


State-run Power Fiance Corporation (PFC) has been appointed as the Nodal Agency and PTC India Limited as the Aggregator. The PTC India will sign three-year (mid-term) agreement for power procurement with successful bidders and Power Supply agreement with the Discoms (distribution companies).


Under the scheme, a single entity can be allotted maximum capacity of 600 MW. The scheme assures a minimum offtake of 55 per cent of contracted capacity. The tariff will be fixed for three years without any escalation.


The bidding will be conducted on the DEEP e-Bidding Portal.



According to industry sources, the move will help nearly 12 GW commissioned thermal power plants to get the medium-term power purchase agreement (PPA) which is a pre-requisite for getting coal linkage.


It is expected that this scheme help to revive the power demand which has affected the generators not having Power Purchase Agreements.


Power Purchase Agreements

A power purchase agreement is a contract between two parties, one who generates electricity for the purpose of sale (the seller) and one who is looking to purchase electricity (the buyer).


PPA’s are entered between the state electricity boards and the independent power producers.


The PPA defines all of the commercial terms for the sale of electricity between the two parties, including when the project will begin commercial operation, the schedule for delivery of electricity, penalties for under delivery, payment terms, and termination.


DEEP Portal (Discovery of Efficient Electricity Price)


It is an e-Bidding and e-Reverse auction portal for procurement of short-term power by DISCOMs. The web portal seeks to ensure seamless flow of power from seller to the buyer.


The portal is an initiative of the Ministry of Power with the objective to introduce uniformity and transparency in power procurement by the DISCOMs and at the same time promote competition in the electricity sector.


Source-The Times of India.