The Gazette of India

EXTRAORDINARY
PART I - Section 1
PUBLISHED BY AUTHORITY
Ministry of Power
New Delhi,
Dated the [**]
RESOLUTION
No. [**]
Guidelines for determination of Tariff through transparent process of bidding for
procurement of power from Ultra Mega Power Projects (UMPPs) based on
allocated domestic captive coal blocks and to be set up on Build, Own and Operate
(BOO) basis
1.

Preamble

1.1 In order to promote competition in the procurement of power through a competitive

and transparent process, the Central Government has, after extensive consultation
with stakeholders and experts, evolved a model contractual framework for the
procurement of power on a long-term basis for a minimum period of 25 years, by the
distribution licensees or the body authorized by the State (Procurers) from power
producers who agree to construct and operate Ultra Mega Power Projects (UMPPs)
sourcing coal from allocated domestic captive coal block on a Build, Own, Operate
(BOO) basis.
1.2 The development of UMPPs is an initiative of Government of India with the support
of Central Electricity Authority (CEA) as the Technical Partner and Power Finance
Corporation Ltd. (PFC) as the Nodal Agency.
1.3 For the purposes of UMPPs sourcing coal from allocated domestic captive coal
blocks, these Guidelines shall replace the earlier Guidelines notified by the Central
Government vide notification No. 23/17/2011-R&R (Vol-V) dated 21st September
2013.
2.

Scope of the Guidelines

These Guidelines are being issued under the provisions of Section 63 of the
Electricity Act, 2003 and shall govern the bidding process to be conducted by the
Procurers for procurement of power from location specific UMPP sourcing coal
from allotted domestic captive coal block.

3.

Preparation for inviting bids

3.1.

The procurement shall be through a combined bidding process through the

Authorized Representative. The Authorized Representative may be one of the
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Procurers or the Operating SPV to be incorporated in terms of Paragraph 3.3

below, or any other entity authorized by the Procurers. The Authorized
Representative would be authorized by the Procurers to undertake necessary
Project development activities and to conduct on their behalf the bidding process
for selection of Developer for the UMPPs and to take all necessary actions as may
be required for such selection and matter incidental thereto. The cost for the
bidding process including the Project development activities shall be initially paid
by the Procurers to the Authorized Representative. The said cost shall be
recovered from the successful bidder. For such combined procurement, the
Procurers shall execute a joint agreement prior to initiating the bidding process.
3.2.

3.3.

The provisions of these Guidelines shall be binding on the Procurers. To carry out
the bidding process expeditiously, the following conditions shall be met by the
Procurers:
(i)

The bid documentation shall be as per the Request for Qualification

(RFQ), Request for Proposal (RFP) and the Power Purchase Agreement
(PPA) (collectively the Standard Bidding Documents) issued by the
Central Government in terms of these Guidelines.

(ii)

Approval of the Central Government shall be sought in the event of

deviations from the Standard Bidding Documents and/or conditions/
provisions given in these Guidelines.

In order to ensure timely commencement of supply of electricity, the following

project preparatory activities shall be completed by the Procurers prior to issuance
of RFQ:
(i)

Incorporation of the SPVs: Two Special Purpose Vehicles (SPVs) namely

the Operating SPV and the Infrastructure SPV shall be incorporated by the
Nodal Agency. The objective of the two SPVs shall be as follows:
(a)

The Operating SPV: The Procurers shall require the successful bidder
selected through the bidding process as enumerated under paragraph 4
to develop the Project through the Operating SPV. To enable this, the
Procurers shall obtain all the approvals required for the Project as
listed in paragraphs 3.3, 3.4 and 3.5 and shall transfer the Operating
SPV to the successful bidder.

(b)

The Infrastructure SPV: The captive coal block land along with the
mining rights and the land required for the construction of the Power
Station shall be held in the name of the Infrastructure SPV. The
Infrastructure SPV shall be transferred to the Procurers at the end of
the bidding process and the land required for the Power Station, the
captive coal block land along with the mining rights thereon shall be
leased by the Infrastructure SPV to the Operating SPV/Seller.

(ii) Land Acquisition for the Captive Coal Blocks: The Procurers shall
identify the total land required for the captive coal blocks and procure the
declaration of the Central Government under Section 9 of the Coal Bearing
Areas (Acquisition & Development) Act 1957, in the name of the
Infrastructure SPV for the portion of land that is sufficient to enable the
Operating SPV/Seller to source coal required to operate the Power Station at
normative availability for a period of at least five years from the COD of 1st
Unit of the Power Station.
(iii) Environmental Clearance for the Power Station: Rapid Environmental
Impact Assessment (EIA) Report for Power Station should be made
available.
(iv) Water linkage: The Procurers shall obtain the in-principle approval for
water linkage required for the Project in the name of the Operating SPV.
3.4.

The following activities shall be completed by Procurers prior to issuance of RFP:

(i) Site identification and Land Acquisition for the Power Station: The
Procurers shall identify the total land required for the Project and procure
the pronouncement of an award under Section 23 of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 or any other applicable law in the name of the
Infrastructure SPV for the land which shall be critical for achieving the
COD of the Project. The critical land shall be defined by the Procurers on
case to case basis.
(ii)

Environmental Clearance for the Power Station: The requisite proposal

for the Environmental Clearance for Power Station in the name of the
Operating SPV should have been submitted before the concerned
administrative authority responsible for according final approval.

(iii) Forest Clearance (if applicable) for the land for the Power Station:
Requisite proposal for the Forest Clearance in the name of the Operating
SPV should have been submitted, to the concerned administrative authority
responsible for according the final approval.
(iv) Connectivity and Long Term Open Access: Application for Connectivity
and Long-term Access in the name of the Operating SPV should have been
submitted to the CTU in accordance with the CERC (Grant of Connectivity,
Long-term Access and Medium-term Open Access in inter-State
Transmission and related matters) Regulations, 2009.
(v)

Compilation of requisite Hydrological, Geological, Meteorological and

Seismological data and preparation of a Detailed Project Report (DPR)
for Power Station as well as the Geological Reports for the Captive Coal
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Blocks: The bidders shall be well advised to verify the data through their
own sources, as the risks would lie with the Operating SPV/Seller.
3.5.

The following activities shall be completed by Procurers prior to signing of the

PPA or transfer of Operating SPV to the successful bidder, whichever is later:
(i)

Lease of Land for the Power Station: The Infrastructure SPV shall
transfer the critical land for the Power Station on a lease basis to the
Operating SPV. All the other responsibilities/actions with regard to the
critical land after the pronouncement of an award under Section 23 of the
Right to Fair Compensation and Transparency in Land Acquisition,
Rehabilitation and Resettlement Act, 2013 shall be the responsibility of the
Operating SPV/Seller. Further, all actions for the remaining area of the total
land required for the Power Station including the Rehabilitation &
Resettlement (R&R) obligations for the total land for Power Station shall be
that of the Operating SPV/Seller. It is hereby clarified that the remaining
area of the land shall be acquired by the Operating SPV/Seller in the name
of the Infrastructure SPV which in turn shall be leased to the Operating
SPV/Seller.

(ii)

Lease of Captive Coal Block Land: The Infrastructure SPV shall transfer
the land that is sufficient to enable the Operating SPV/Seller to source coal
required to operate the Power Station at normative availability for a period
of at least five years from the COD of 1st Unit of the Power Station, on a
lease basis. All the other responsibilities/actions with regard to the aforesaid
captive coal block land after the procurement of the declaration of the
Central Government under Section 9 of the Coal Bearing Areas (Acquisition
& Development) Act 1957 shall be the responsibility of the Operating
SPV/Seller. Further, all other actions for the remaining area of the total
captive coal block land, including the Rehabilitation & Resettlement (R&R)
obligations for the whole captive coal block land shall be that of the
Operating SPV/Seller. It is hereby clarified that the remaining area of the
captive coal block land shall be acquired by the Operating SPV/Seller in the
name of the Infrastructure SPV which in turn shall be leased to the
Operating SPV/Seller.

(iii) Environmental Clearance for the Power Station should have been obtained
in the name of the Operating SPV.
(iv) Stage I Forest Clearance for the Power Station should have been obtained in
the name of the Operating SPV.
3.6

The Procurers shall within 6 (six) months of the Effective Date of the Power

Purchase Agreement appoint a consulting engineering firm to be the Independent

Engineer for the project. The Procurers shall stipulate the minimum qualifications
criteria for the independent engineer and the appointment shall be made on the
basis of the said criteria.
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4.

Bidding Process

4.1.

A two-stage bidding process featuring separate RFQ and RFP stages shall be
adopted.

4.2.

The Procurers shall accord wide publicity by publishing the RFQ notice in at least
two national newspapers and at least one international newspaper and also on the
website of the Nodal Agency. The bidding shall necessarily be conducted by way
of International Competitive Bidding (ICB). For the purpose of the RFQ,
minimum conditions to be met by the bidders shall be specified by the Procurers
in the RFQ notice.

4.3.

Bidders who have qualified at the RFQ stage shall be eligible to participate in the
RFP stage.

4.4.

The Procurers shall provide written interpretation/clarifications of the Bidding

Documents to all the bidders.
Wherever revised Bidding Documents/ amendments are issued, the Procurers
shall provide bidders at least 15 days after issue of such documents for
submission of the Application/Bids.

4.5.

The following shall be notified and updated by CERC every year:

(a) Escalation rate for Variable Charge. (separately for evaluation and payment)
(b) Discount rate to be used for Bid Evaluation

4.6.

Bid Submission and Evaluation

4.6.1. To ensure competitiveness, the minimum number of qualified bidders should be at

least two other than any affiliate company or companies of the Procurers. If the
number of such bidders responding to the RFQ is less than two then the bidding
process shall be annulled. However, if the number of qualified bidders responding
to the RFP is less than two and if the Procurers desire to continue with the bidding
process, the same may be done if Procurers who procure at least 75% of the total
allocated capacity give their consent to the opening of the Bid.
4.6.2. The Procurers shall constitute a Committee for evaluation of the Bids with at least
one member external to the Procurers organisation and affiliates. The external
member shall have expertise in financial matters / bid evaluation. Keeping in view
the different expertise/skills required for evaluation of the RFQ and RFP bids, the
composition of members should differ in respect of the Committees being set up
for the evaluation of RFQ and RFP bids. However, the Chairman of both these
Committees should be the same. The Procurers shall reveal past associations with
the external member - directly or through its affiliates - that could create potential
conflicts of interest.
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4.6.3. The bidder whose levelised tariff as per the evaluation procedure is the lowest,
shall be considered as the successful bidder for the award. The Evaluation
Committee shall have the right to reject all the price bids if the rates quoted were
not aligned to the prevailing market prices.

4.7.

Time Table for the Bidding Process

4.7.1. In the bidding process, (i) a minimum period of 45 days shall be allowed between
the publication of RFQ and last date of submission of responses to RFQ and (ii) a
minimum period of 150 days shall be allowed between the issuance of RFP and
the last date of RFP Bid Submission.
The timetable for the bidding process is indicated in Annexure-I.
4.7.2. In normal circumstances, the bidding process is likely to be completed in a period
of 300 days, but the Procurers may give extended timeframe than indicated in
Annexure-I. However, if the bidding process is likely to take more than 730 days,
approval of the Central Government shall be obtained
5.

Contract Award and Conclusion

5.1.

After conclusion of the bidding process the Procurers shall provide a certificate on
the conformity of the bidding process to these Guidelines.

5.2.

The Procurers shall sign the PPA with the Operating SPV.

5.3.

For the purpose of transparency, the Procurers shall make the Bids public by
indicating all the components of tariff quoted by all the bidders. While doing so,
only the name of the successful bidder shall be made public and details of tariffs
quoted by other bidders shall be made public anonymously.

5.4.

The Procurers shall also make public the PPA. For this purpose, a notice shall be
published in at least two national newspapers and full details shall be posted on the
website of all the Procurers for at least thirty days.

5.5.

The signed PPA along with the certification provided by the Evaluation Committee
and by the Procurers as provided in Paragraph 5.1 shall be forwarded to the
Appropriate Commission for adoption of Tariff in terms of Section 63 of the Act.

Annexure-I: Time Table for the Bidding Process

Sl.
No.

Activities to be completed before Event in next

column takes place

1.

Event
Publication of RFQ

Elapsed
Time from
Zero date
Zero date

- Declaration of the Central Government under

Section 9 under the Coal Bearing Areas
(Acquisition & Development) Act 1957, for
the portion of land that is sufficient to enable
the Operating SPV/Seller to source coal
required to operate the Power Station at
normative availability for a period of at least
five years from the COD of the 1st Unit of the
Power Station.
- Environmental clearance: Rapid EIA Report
for Power Station should be available.
- Fuel arrangements: Allocation of Coal
Mine(s)/Block(s) to the Infrastructure SPV
should be available.
- In principle approval for Water linkage should
be available.
2.
3.

Submission of Responses of RFQ

-

Award under Section 23 of the Right to Issuance of RFP

Fair Compensation and Transparency in
land Acquisition, Rehabilitation and
Resettlement Act, 2013 or other
applicable law for the portion of Land that
is critical for achieving COD of the
Project.
Environmental Clearance: The proposal
for Environmental Clearance for Power
Station should have been submitted before
the concerned authority responsible for
according final approval.
Forest Clearance (if applicable): Requisite
proposal for Forest Clearance for the land
for the Power Station should have been
submitted before the concerned authority
responsible for according final approval.
Connectivity and Long Term Open
Access: Application for Connectivity and

45 days
75 days

Sl.
No.

Activities to be completed before Event in next

column takes place

Event

Elapsed
Time from
Zero date

Long-term Access should have been

submitted to the CTU
Data:
Compilation
of
requisite
Hydrological, Geological, Meteorological
and Seismological data and preparation of
Detailed Project Report (DPR) for Power
Station as well as the Geological Reports
for the captive coal blocks.

4.

Bid conferences etc.

5.

Final clarifications/amendments

6.

RFP bid submission

7.

Evaluation of bids and issue of LOA

240 days

Transfer of Infra SPV to Procurers

and execution of the following
Agreements:
i) Share Purchase Agreement
ii) Default Escrow Agreement and
the Agreement to Hypothecate
cum Deed of Hypothecation,
iii) Land Lease Agreement for
critical land,
iv) Land Lease Agreement for the
portion of land that is sufficient
to enable the Operating
SPV/Seller to source coal
required to operate the Power
Station for a period of at least
five years from the COD of the
first Unit;
v) Power Purchase Agreement

300 days

8.
9.

225 days

Environmental Clearance for the Power Station

should have been obtained.

*In case of any change in RFP document, the Procurers shall provide bidders additional time in
accordance with paragraph 4.10.
Note : It is clarified that if the Procurers give extended time for any of the events in the bidding
process, on account of delay in achieving the activities required to be completed before the
event, such extension of time shall not in any way be deviation from the these Guidelines.
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