Coal row fallout: Inspector raj returns

Private power project developers led by Tata Power and Reliance Power today met officials from the Prime Minister’s Office on this,among other issues.

The proposal,part of a contentious bidding regime being ushered into the power sector,is in the revised Standard Bidding Documents (SBDs) for power projects floated by Power Ministry in partnership with the Planning Commission.

The provision in the SBD stipulates the appointment of an independent engineer by the state electricity board to oversee operations of the plant,including efficiency in the usage of coal,to decide whether the electricity tariff being charged by the plant is “fair”.

The engineer will also have the mandate to review drawings and documents,inspect and monitor the construction and completion of the project.

“Having an external entity in the form of an ‘independent engineer’ dictating (or sitting in judgment) in these circumstances for all kinds and forms of issues presents an impossible situation that is bound to raise severe conflicts,” an official from the State Bank of India’s Project Finance and Leasing unit said.

The industry,through its lobby group Association of Power Producers (APP),which represents an upcoming project portfolio of around 1,20,000 MW and has Tata Power,Reliance Power,Essar,Jindal Power and Adani among its members,along with industry chambers FICCI,CII and Assocham,have already voiced their opposition to the new bidding format,which includes this inspector regime.

The APP met officials in the PMO on the issue today. Bankers,led by SBI along with ICICI,Punjab National Bank and IDFC,have also registered their negative views about the new format.

The SBI,which has an exposure in about 50,000 MW of thermal capacity under implementation with aggregate limits of about Rs. 49,000 crore,has said that “lending on the basis of the proposed SBD,including the absence of security,will only compound the problems and may further impact investments in lending to the sector”.