Amid reform measures by government, the Associated Power Producers director-general Ashok Khurana has sought Power Minister Veerappa Moily for an immediate meeting of joint delegation of APP, ASSOCHAM, CII and FICCI to discuss structural issues related to power purchase agreements (PPAs) put forth by the government.
The power producers association which has top 20 private power companies as its members has pointed out that the new reform measure is likely to cause risk to power project development in the country, as dip in investors’ confidence might lead to contract failures and deters investments in the sector. It indicated that the new proposed PPA structure would change the balance of risk entirely in development of power projects.
The body also notes that the Design, Finance, Build, Operate and Transfer (DFBOT) framework proposed in the new PPA demands the developers to bring in finance, technology, operations skills, a part of the fuel required, and a host of other inputs, which counts for more financing on projects.
The new proposed model also takes away the provision of availing international financing as lending from international banks requires security on land and project assets before lending and the new PPA structure proposes the land ownership continue with the utility and does not allow developers to create any charge on the project assets, it noted.
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