Therefore, it is suggested that the condition of fuel availability should be modified such that fuel availability or tie-up in case of coal based projects is correlated to 70% of the coal linkage according to the phased development of the project.
Environmental & Forest Clearance:
The process of obtaining environmentalclearance is time taking. Therefore, it is possible that at the time of bidding, theprocess of obtaining such clearance is in an initial or intermediate stage. While it isrecognized that the process of public hearing and its outcome has a crucialbearing on the fate of the clearance, the condition of submitting the proposal forfinal environmental clearance approval is somewhat restrictive. Given that theprocess of bidding takes time to culminate, it is possible that the proposal for finalenvironmental clearance may be submitted by the time of opening of the financialbid.
Therefore, it is suggested
that the condition of environmental and forest clearance should be modified such that the bidder is required to submit the requisite proposal, for the final environmental clearance approval by the time of opening of the financial bid
. If at the time of opening of the financial bid,the bidder is not able to meet this requirement, the bid should be returned asunresponsive or disqualified.
Issue 2: Contract Performance Guarantee
The successful bidder is required to provide a Contract Performance Guaranteewithin thirty days of issue of Letter of Intent (LoI) by the Procurer. This Guaranteeis determined on the basis of Rs. 30 lakhs/MW of the total Contracted Capacity.The first issue here is that the level of Guarantee may turn out to be very high (for1000 MW, Rs. 300 Crores) and a bidder without deep pockets may be unable tofurnish such guarantee prior to the financial closure of the project.
Therefore, it is suggested that the level of the Contract Performance Guarantee may be lowered. It may be argued that lowering the level of this guarantee may encourage non-serious bidders. To take care of such concerns, the termination cost of the PPA may be increased and kept at a very high level so that it prohibits non-serious bidders.