Power purchase: tender process replaced by e-bidding platform

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New Delhi: The government has replaced the conventional tendering process for power purchase by state power distributors with an e-bidding platform in an attempt to make the bidding more efficient and transparent by bringing power procurement contract details to the public domain.

Three states, Kerala, Bihar and Andhra Pradesh, have already sought 1,000 megawatt (MW) of short-term power through the power trading portal, which was opened by power minister Piyush Goyal on Tuesday in the presence of state power secretaries in the national capital.

The Discovery of Efficient Electricity Price (DEEP) e-bidding reverse auction portal for now will cover short-term power purchase of less than a year and in the next few months, start offering the option for longer-term power purchase too.

The idea is to use the portal for all forms of power purchase and trading, including for 15 years and more, reducing the role of humans in transactions and eliminating corruption.

In the bidding process, state electricity regulators endorse the price discovered through a competitive bidding.

At present, only 10% of total power purchase by state distribution companies, or discoms, are short-term.

“This portal will ensure seamless flow of power from seller to buyer and will be a very strong weapon to curb illegal transactions. It will also help in price reduction through competition,” Goyal said.

Migration to the online platform is mandatory for all states. Power purchase process will no longer be bilateral in nature, added Goyal.

Suzlon Group chairman Tulsi Tanti said that the facility will encourage power trading among states. “If a state has surplus power, it could find a quick buyer for it through this platform,” said Tanti.

A power ministry official, who did not want to be named, said the entire short-term power purchase process will take only 10 days to conclude, out of which six days are for obtaining digital signature of contracting parties.

The government has been increasingly adopting the e-auction method to improve efficiency in the power sector. Infrastructure-intensive industries, such as power distribution and natural gas distribution, where two players cannot serve customers in the same geography, are prone to inefficiencies.

Recently, the government adopted e-auctions for procurement of transformers and other equipment for two flagship schemes for village lighting and strengthening of urban transmission network.

Last year, government e-auctioned 31 out of 214 coal blocks. The allocation, done without an auction during the previous UPA government, was cancelled by the Supreme Court in 2014.