The 6,600 MW power supply tender of the Maharashtra power utility is subject to regulatory scrutiny

Mumbai: Maharashtra State Electricity Distribution Company Ltd’s (MSEDCL) tender for long-term power procurement of 6,600 MW has been secured by the Maharashtra Electricity Regulatory Commission (MERC).

In response to an application filed by state power utility MSEDCL seeking approval for a deviation from standard bidding documents, the MERC asked the state-owned power utility why the approval was not sought before the bidding process commenced, as per the regulator’s June 25 order.

The state power regulator has directed MSEDCL to demonstrate in a measurable manner how the proposed deviations in the tender documents are in the interest of consumers.

MSEDCL had in March floated a tender for procurement of 1,600 MW of thermal power and 5,000 MW of solar power in Maharashtra, just before the Model Code of Conduct for the Lok Sabha elections came into force.

The energy purchase was intended to cover demand for 2033-34, i.e. in 10 years.

In its order, MERC asked MSEDCL to clarify that since the proposed power purchases to meet the demand for 2033-34 will commence in the next 2-4 years, such early contracting will not lead to loss of generation capacity.

MERC also wanted to know whether the Maharashtra power utility had reserved enough capacity to meet the projected demand by 2033-34 as per the order.

MERC asked MSEDCL to explain its reasons for considering purchasing combined solar and thermal power from a single entity. The Commission wants to know whether all future heat procurement will be based on the same principle.

According to sources, MSEDCL aims to complete bidding in July, ahead of the release of the code of conduct for the state elections to be held in October 2024.

According to an industry source, projects of this scale would require an investment of around Rs 40,000 crore. Any interested party wishing to bid will have to get bids from equipment suppliers, tie up financing, and also arrange other essential project elements such as land, water and transmission.

The tender does not provide sufficient time for interested parties to meet these basic requirements. They add that this may lead to limited participation, which is not in the consumer’s interest and may result in higher energy purchase costs and tariffs.

The source added that allowing enough time for wider participation in the tender will always be in the interest of consumers as energy demand starts in 2033.

MSEDCL has 7 days to file submissions in response to the queries filed by MERC. The next date of hearing is set for July 2, 2024.