IPPs demand extension for financial closure

NEW DELHI, FEB 25: Independent power producers (IPPs) have asked for a 90-day extension for achieving financial closure for their liquid-fue...

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NEW DELHI, FEB 25: Independent power producers (IPPs) have asked for a 90-day extension for achieving financial closure for their liquid-fuel-based power plants as against the March 31 deadline set by the government.

Informal discussions between the industry and the power and petroleum ministries have already been held on this score. Sources say CII is now in the process of formulating a detailed memorandum, which will shortly be submitted to the ministries. Assocham also has asked for an extension in its recent meeting with the power secretary.

CII feels that the extension is necessary because a host of important issues in the fuel supply agreement (FSA) needs to be sorted out for making it bankable.

The first contentious issue relate to fuel quantity or the annual guaranteed quantity of fuel. The model FSA says that oil companies will supply fuel to the power producers, enabling them to generate power at 80 per cent plant load factor (PLF). This, producers say, should be increased to 90 per cent. Thesecond contentious issue relates to the quality of fuel. Producers say that oil companies are not ready to disclose the trace metal content in liquid fuels. Consequently equipment suppliers are not offering guarantees to gas turbines and equipment which are affected by trace metals. It is felt that oil companies should give the trace metal specifications in the fuel.