Executive Summary:
These guidelines, effective from February 10, 2014, address the procurement of electricity for medium-term (1-5 years) from power stations set up on a Finance, Own and Operate (FOO) basis. They incorporate Model Bidding Documents and aim to promote competition and transparency in electricity procurement. These guidelines are issued in accordance with Section 63 of the Electricity Act, 2003.
Key Points / Main Content:
Model Bidding Documents:
* The terms in the Model Bidding Documents (Model Request for Qualification, Model Request for Proposals, and Model Agreement for Procurement of Power) are part of these guidelines.
* Deviations from the Model Bidding Documents require prior approval from the Central Government, except for project-specific modifications expressly permitted within them.
Project Scope:
* These guidelines apply to projects with power procurement agreements between one and five years, with a possible extension of up to 25% of the initial period or one year, based on mutual consent.
Tariff Determination:
* The tariff determined through the bidding process based on these guidelines shall be adopted by the Appropriate Commission according to Section 63 of the Electricity Act.
Repeal and Savings:
* The 2005 guidelines for tariff determination by bidding for distribution licensees are repealed regarding medium-term electricity procurement.
* Agreements signed or actions taken before February 10, 2014, remain unaffected by the repeal of the 2005 guidelines.
Impact Analysis:
Central Government:
* Impact: Responsible for approving deviations from the Model Bidding Documents.
* Action Required: Review and approve or reject any proposed deviations from the Model Bidding Documents.
State Governments:
* Impact: Should promote competition in electricity procurement.
* Action Required: Support distribution licensees in implementing competitive and transparent procurement processes.
Electricity Regulatory Commissions:
* Impact: Responsible for adopting tariffs determined through the bidding process.
* Action Required: Review and adopt tariffs in accordance with Section 63 of the Electricity Act, 2003.
Distribution Licensees:
* Impact: Required to use the Model Bidding Documents for medium-term power procurement from FOO power stations.
* Action Required: Adopt the Model Bidding Documents and conduct open, transparent competitive bidding. Seek Central Government approval for any deviations from the model documents.
Power Producers (FOO Basis):
* Impact: Subject to competitive bidding for medium-term power procurement.
* Action Required: Participate in the bidding process based on the Model Bidding Documents.
Key Entities Referenced
Electricity Act, 2003: An act of the Indian Parliament to consolidate the laws relating to generation, transmission, distribution, trading and use of electricity and generally for taking measures conducive to development of electricity industry, promoting competition therein, protecting interests of consumers and supply of electricity to all areas, rationalisation of electricity tariff, ensuring transparent policies regarding subsidies, promotion of efficient and environmentally benign policies.
Central Government: The Union Government of India, responsible for creating policy and regulatory environment for the electricity sector.
State Governments: The governments of the individual states within India, involved in promoting competition in electricity procurement.
Electricity Regulatory Commissions: Independent statutory bodies responsible for regulating the electricity sector, including promoting competition in procurement.
distribution licensees: Entities licensed to distribute electricity to consumers, responsible for procuring electricity through competitive processes.
Finance, Own and Operate FOO: A business model where power generating stations are set up on Finance, Own and Operate FOO basis for medium term power.
Model Bidding Documents: Collectively refers to the Model Request for Qualification (MRFQ), the Model Request for Proposals (MRFP) and the Model Agreement for Procurement of Power (MAPP), used by distribution licensees for electricity procurement.
Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees: Guidelines issued on 19th January, 2005, which are repealed in so far as they relate to procurement of electricity for medium term.
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EXTRAORDINARY
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PART I—Section 1
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VªÉÉäÉÊiÉ +É®Éä®É, ºÉƪÉÖBÉDiÉ ºÉÉÊSÉ´É
MINISTRY OF POWER
RESOLUTION
New Delhi, the 10th February, 2014
Guidelines for Procurement of Electricity for Medium Term from Power Stations set up on
Finance, Own and Operate (FOO) basis
No. 23/17/2013-R&R(Vol-II).—Whereas the Central Government is engaged in creating an
enabling policy and regulatory environment for the orderly growth of generation of electricity in
accordance with the provisions of the Electricity Act, 2003 (the “Act”);
Whereas it is incumbent upon the Central Government, State Governments, Electricity Regulatory
Commissions and the distribution licensees to promote competition in the procurement of electricity
through competitive and transparent processes;
Whereas the Central Government has, after extensive consultations with various stakeholders and
experts, evolved a model contractual framework for procurement of electricity by the distribution
licensees from power producers who agree to construct and/or operate power generating stations set up
on ‘Finance, Own and Operate (“FOO”) basis for medium term power.
Whereas, the Central Government has, vide its letter No. 23/17/2013 -R&R (Vol-II) dated 29th
January, 2014, issued the model documents comprising the Model Request for Qualification (the
“MRFQ”), the Model Request for Proposals (the “MRFP”) and the Model Agreement for Procurement
of Power (the “MAPP”) (collectively, the “Model Bidding Documents”) to be adopted by distribution
licensees for procurement of electricity from the aforesaid power producers through a process of open and
transparent competitive bidding based on offer of the lowest tariff from power generating stations
constructed and/or operated on FOO basis;
Now, therefore, in exercise of the powers conferred under section 63 of the Electricity Act, 2003,
the Central Government notifies these guidelines to be known as the ‘Guidelines for Procurement of
Electricity for medium term from Power Stations set up on Finance, Own and Operate (FOO) basis (the
“Guidelines”). These Guidelines shall come into effect from the date hereof subject to the following
terms and conditions:
1. The terms and conditions specified in the Model Bidding Documents referred to hereinabove
shall, by reference, form part of these Guidelines and shall be treated as such.¹Hkkx I—[k.M 1º Hkkjr dk jkti=k % vlk/kj.k 3
2. The application of these Guidelines shall be restricted to projects constructed and/or operated in
accordance with an Agreement for procurement of power for a period of between one and five years, with
a provision for extension of this period for the lower of 25% of the initial contract period and one year,
with mutual consent.
3. The tariff determined through the bidding process based on these Guidelines comprising the
Model Bidding Documents shall be adopted by the Appropriate Commission in pursuance of the
provisions of section 63 of the Act.
4. Any deviation from the Model Bidding Documents shall be made only with the prior approval of
the Central Government. Provided, however, that any project specific modifications expressly permitted
in the Model Bidding Documents shall not be construed as deviations from the Model Bidding
Documents.
5. The ‘Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by
Distribution Licensees’ issued on 19th January, 2005, as amended from time to time, including the
standard bidding documents for Case-1 and Case-2 projects are hereby repealed in so far as they relate to
procurement of electricity for medium term. Provided, however, that any agreements signed or actions
taken prior to the date hereof shall not be affected by such repeal of the said guidelines of 2005 and shall
continue to be governed by the guidelines repealed hereunder.
JYOTI ARORA, Jt. Secy.
Printed by the Manager, Government of India Press, Ring Road, Mayapuri, Ne w Delhi-110064
and Published by the Controller of Publications, Delhi-110054.