Thursday, December 6, 2012

TN floats largest-ever solar tender

The Tamil Nadu government has come out with its tender for award of solar power projects in the State — the largest ever issued in India — even as the threat of anti-dumping duty on imported cells and modules from select countries looms large over the programme.
The tender, issued today, is for the “procurement of solar power from developers establishing solar power plants of 1 MW or above capacity in the State of Tamil Nadu at the rate to be finalised through competitive bidding.”
The basic contours of the tender are the same as communicated to the public by the state electricity distribution utility, Tangedco — that projects would be awarded to the bidder who quotes the least tariff. Payments to developers will be secured by an “unconditional, revolving and irrevocable letter of credit’ mechanism. The tender ( gives timelines for various milestones to be achieved (mainly, signing of power purchase agreement within 120 days from the date of issue of tender (today), and commissioning of projects within 360 days.) Other conditions include performance guarantee (Rs 30 lakh per MW) and the penalties for delay.
There is no mention of rationing of the 1,000 MW across bidders, as was indicated by Tangedco earlier.
The tender comes at a time when the Ministry of Commerce, Government of India, has just initiated anti-dumping investigations into solar cells and modules imported from China, the US, Taiwan and Malaysia.
“The short-term impact will be felt on the 100 MW of projects under the Rajasthan policy and 1,000 MW programme of Tamil Nadu policy. At this stage, we have no idea how this will play out,” says Madhavan Nampoortiri, Founder of RESolve, a solar consultancy.
The anti-dumping threat brings in one more dimension of risk to the developers’ table, points out Sanjay Chakarbarti of Ernst & Young. What will the bidders assume the module prices to be?
Given the tight timelines, most prospective bidders would have already negotiated a price with cell or module suppliers.
Now, they will have to re-negotiate to come to an agreement on who will bear the burden of anti dumping duty, if it comes.
It is apparent from the statements made by Tangedco officials at a ‘bidders consultative meeting’ that was held on November 23 that Tamil Nadu expects the tariffs to settle at around Rs 6 a unit. But bidders may not bid too low, fearing an anti-dumping duty.

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