Ministry of Power notifies Guidelines under Section 63 of the Electricity Act, 2003 for procurement of power on Finance, Own and Operate (FOO) basis.


The Ministry of Power on 20th October 2022, has notified guidelines for procurement of power on Finance, Own and Operate (FOO) basis under para B(v) of the SHAKTI Policy. The objective of the guideline is to facilitate procurement of power on long-term and medium-term basis by the Nodal Agency through transparent bidding to meet power requirement of group of states with coal linkage as per para B(v) of the SHAKTI Policy.

Para B(v) of SHAKTI Policy provides as under:

 “Power requirement of group of States can also be aggregated and procurement of such aggregated power can be made by an agency designated by Ministry of Power or authorized by such States on the basis of tariff based bidding. Coal linkages will be earmarked for such agencies by pre-declaring the availability of coal linkage with description, based on which such agency will undertake tariff based competitive bidding for long-term and medium-term procurement of power and recommend grant of these linkages to successful bidders. The methodology in this regard shall be formulated by Ministry of Power.”

These guidelines are being issued under the provisions of Section 63 of the Electricity Act, 2003 for procurement of electricity by States/ distribution licensees (Procurer) for: (a) long-term procurement of electricity for a period of 12 years to 15 years; (b) Medium term procurement for a period of up to 7 years but exceeding 1 year.

For procurement of electricity under these guidelines, the tariff shall be paid and settled for each payment period (not exceeding one month). A multi-part tariff structure with separate Fixed Charge and Variable Charge components of tariff shall form the basis for bidding. The Base Fixed Charge and the Base Variable Charge specified in the bid shall each be at least 35% of the quoted Tariff.

Further the Responsibility for arranging access, payment of transmission charges and for bearing losses in respect of intra-state transmission shall be that of the supplier.

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