Uttarakhand Govt Clarifies 1,320 MW Thermal Power Procurement Process, Says Rules Followed

The Uttarakhand government on Thursday defended its proposed procurement of 1,320 MW of thermal power, stating that the process is being carried out in accordance with prescribed rules, technical requirements, competitive bidding and approval from the Uttarakhand Electricity Regulatory Commission (UERC).

Principal Secretary (Energy) R Meenakshi Sundaram issued a clarification in response to questions raised by some political parties. He said the allegations were not based on facts and that the objective was to secure the state's long-term and growing electricity requirements, rather than benefit any particular company.

Explaining the tender process, Sundaram said the Model Bidding Document issued by the Union Power Ministry in 2019 is a general model document. Changes were examined based on the technology, location, fuel availability, transportation costs and other circumstances of individual projects. Suggestions and objections received from bidders during the tender process were examined from technical and practical perspectives, and the necessary changes were placed before the UERC, which approved the amendments after detailed deliberations.

Sundaram also rejected the perception that the procurement was being awarded to a particular company without competition. He said five companies were found eligible at the Request for Quotation (RFQ) stage and competition was maintained during the Request for Proposal (RFP) stage. "The final selection will be based on the total tariff quoted through the competitive bidding process," he said.

The Principal Secretary said the proposed 1,320 MW procurement is aimed at meeting Uttarakhand's long-term baseload requirement and ensuring continuous and reliable power supply to consumers. He noted that Uttarakhand's importance as a tourism and pilgrimage destination, along with its environmental sensitivity, was considered while framing the tender.

Since thermal power plants require large quantities of coal, transporting it over long distances could increase costs. The tender therefore allows the plant to be established at any suitable location in the country, enabling companies to quote competitive tariffs after considering fuel availability, transportation costs and other factors. Sundaram clarified that there is no restriction on setting up the plant in Uttarakhand and that any company establishing a plant in the state and offering electricity at a competitive tariff could participate in the prescribed process.

On transmission costs, he said the arrangements and associated expenses for supplying electricity to Uttarakhand would be determined according to the tender and tariff conditions. "Therefore, the claim that establishing the plant outside Uttarakhand would automatically result in the entire additional cost being borne by consumers was not correct," he said. The actual financial impact on consumers would have to be assessed on the basis of the total electricity tariff.

Regarding fixed charges, Sundaram said the Model Bidding Document prescribed a fixed charge ceiling of 70 per cent, with at least 30 per cent remaining as fuel charge. Considering bidders' actual costs, fuel availability and circumstances of potential locations, UPCL proposed increasing the fixed charge ceiling to 75 per cent, allowing the fuel charge component to be kept at up to 25 per cent. He said electricity prices were not evaluated solely on the basis of fixed charges but on the total tariff comprising fixed charges and variable or fuel costs. The proposal was examined and approved by UERC after due deliberation.

The clarification comes amid ongoing debate over the state's power procurement strategy. The government maintains that the process is transparent and aimed at securing reliable and affordable electricity for the state's residents.