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Tamil Nadu govt assures payment for Solar power projects – bid documents for 1000 MW to be issued in 7-10 days

According to reports, the Tamil Nadu Government today assured the Solar Power producers that it will give letter of credit (LOC) and the payment will not be defaulted. The assurance comes at a time the State Electricity Board owes little over Rs 1000 crore to the wind energy sector. Today assurance comes in the back drop of Tamil Nadu’s plan to add around 3000 MW of solar power in three years.

While addressing the prospective bidders consultation meeting for 1000 MW sate distributioin company Tangedco’s Managing Director K Gnanadesikan said that the main part of the project is that the payment is assured and there will be a payment support mechanism by way of letter of credit and the bid will be on the basis of rate contract.

It may be noted, the Government of Tamil Nadu has directed Tangedco to procure 1000 MW this year which will be supplied to high tension and LT industrial and commercial establishments. The bid document will be issued within 10 days. The company which are participating in the bid should have minimum Rs 1 crore net worth per MW.
The process will be decentralised so that anywhere the state the plant could be set up. “The Government will not help on land acquisition for the project and there wont be any subsidy for the 1000 MW and we will enter into 20 year power purchase agreement,” said Gnanadesikan.

He added, while the commencement of purchasing the power will be 2013-14, the distribution company will increase the price by five per cent every year upto 10 years.

While welcoming Government’s Policy, which stipulates a target of 3000 MW capacity to be established by the end of 2015, some of the solar majors have said that the rate contract could have an impact on the quality of power produced. According to the bid norm, the lowest bidding will bag the contact and rest of the players.

They also said evacuation is one of the key issues, which the state Government need to addressed, said C R Vijaya Kumar, EVP, MRO-TEK Ltd. For evacuation state electricity Board will use the existing infrastructures, said Gnanadesikan.

Other industry representatives have also said that Government’s decision not to intervene in land acquisition will be another bottleneck and also no support from the Government on financial.

It may be noted, the state Government has mandated for the HT Industrial and commercial consumers to use solar power, under solar purchase obligation (SPO), which has been fixed as three per cent for 2013 and six per cent for 2014 out of their total energy consumption.

To meet this target the state government has been inviting solar power producers to set up plant in the state.

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