Maharashtra’s power purchase offer for FY34 crosses regulatory threshold

NEW DELHI: Maharashtra State Electricity Distribution Company Ltd’s (MSEDCL) bid to procure 6,600 MW of power to meet projected demand during 2033-34 has faced regulatory resistance due to deviations from standard tender norms.

In response to MSEDCL’s request for an “urgent” hearing on the matter, the Maharashtra Electricity Regulatory Commission on June 25 ordered the state-owned distribution company to explain why it was not registered before the bidding process began and “demonstrate in measurable terms” the benefits to consumers.

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The tender in question was announced in March 2023, just before the Lok Sabha Elections Model Code came into force, and aims to freeze 1,600 MW of thermal power and 5,000 MW of solar power.

The regulator has given MSEDCL seven days to explain the rationale behind considering joint procurement of solar and thermal power from a single entity; and whether this will be the rule for all future procurement of thermal power.

The order outlines restrictions on bringing in electricity from out of state, which could be a hurdle because joint purchasing from a single entity means the generating capacity could be out of state.

Regarding the long contract period of 10 years, the order has asked for clarification on whether the contract will not lead to stranded generation capacity as the project will be commissioned in the next 2-4 years and whether MSEDCL has tied up enough power to meet projected demand before 2033–2034.

MSEDCL’s call for an urgent hearing to approve the proposed rate waivers is being seen as an attempt to complete the bidding process in July before the model code for October assembly elections comes into effect.

The scale of investment required in generating capacity to meet MSEDCL’s requirements is estimated at around Rs 40,000 crore. Industry observers say putting finances on hold and arranging other essential elements of the project, such as land, equipment supply, land, water and transmission infrastructure, will take time and could lead to limited participation.