Foreign firms will bag major upcoming contracts for solar energy projects, leaving local companies in the lurch because of the terms and conditions of the upcoming auctions, Indian developers including the AdaniNSE -2.57 % and Hero groups have complained.
Six leading solar developers have protested the decisions of Solar Energy Corporation of India (SECI) and NTPCNSE -1.68 % to set the maximum capacity that a single bidder can bid for at 1800 MW and 2000 MW respectively in their forthcoming auctions.
In a representation to the ministry of new and renewable energy, they have claimed that setting the limit so high would make it impossible for many players to bid and would also give undue advantage to foreign bidders with deeper pockets over domestic ones. Five of the six—Adani Green Energy, Azure Power, Hero Future Energies, Mytrah Energy and Acme Solar— are domestic players, but the sixth curiously is Sprng Energy, backed by the London-headquartered private equity fund Actis LLP.
SECI recently amended its bid documents for the auction of 3000 MW of solar projects, raising the maximum limit to 1800 MW from 750 MW. So did NTPC, which has set the single bidder limit at 2000 MW for its forthcoming auction of 2000 MW. The deadline for submission is June 26 for the SECI bid and July 6 for the NTPC one. The developers have pleaded that both deadlines be postponed until the matter is sorted out.
“Such large bid sizes will prohibit some of the serious players (from bidding), based on financial criteria such as net worth requirement, turnover requirement, line of credit and bank guarantee limitations,” their letter said. “Given the current banking scenario in the country, accessing banking lines for bank guarantees (would be difficult) for domestic players … (and) would make them non-competitive compared to foreign players who would have an undue advantage.”
Setting up 1 MW of solar power costs Rs 6-7 crore, and thus bidding for 1800-2000 MW would require bank guarantees of Rs 10,000-14,000 crore. The letter noted that in recent wind auctions conducted by both SECI and NTPC, the capacity limit for a single bidder had been set at 300 MW and 500 MW respectively, which offered all players a “fair opportunity”. It suggested that the maximum capacity should not exceed 600 MW.
The letter also noted that land acquisition for projects of 1800-2000 MW would be “an uphill task for the bidder”. Each megawatt of solar capacity needs an area of 6-6.5 acres. It pointed out that given the capacity of most transmission lines, evacuating so much power would also be a problem.
Source: economictimes.indiatimes
