Calcutta, June 11: With over 10 major power projects, which are in the pipeline, planning to sell their generation to trading utilities, banks and financial institutions have drawn up an alternative payment security model with a set of norms to fund such projects. The lenders are led by State Bank of India, ICICI Bank, Industrial Development Bank of India and Power Finance Corporation.

The checklist takes a close look at the capital adequacy of the trader in relation to the size of the power station. Also, promoters of the projects will have to ensure that transmission linkages are adequate for the trader to divert electricity if the single-largest buyer of power from a project decides not to draw electricity for any reason.

The promoters would have to satisfy the lenders on viability of power, based on the final cost of delivered electricity to the end-user, incorporating the wheeling charges and trading margins of the trader, institutional sources involved in the exercise said.

Essar Power’s 1,500-MW Hazira project, Jindal’s 1,000-MW Raigarh project, Nagarjuna Power Corporation’s 1,015-MW Mangalore project and the Jaypee group’s 1,000-MW Karcham Wangtoo hydroelectric project are among those where the promoters are in talks with power trading companies for offtake of electricity, instead of selling it to state electricity boards or other distribution utilities.

In the case of new projects, traders would evacuate power directly and then sell it to one or more distribution utilities or to high-tension consumers directly.

“A number of major power projects in the pipeline with a cumulative installed capacity of over 6,000 MW plan to sell power directly to traders. Since institutions finance power projects largely in the form of syndicates, we have jointly worked out the broad contours of the financing plan of such projects,” an SBI official said.

According to industry players, while promoters of most of the projects are in talks with PTC India for selling the entire generation from their plants, other traders such as NTPC, Vidyut Vyapar Nigam Ltd, Reliance Energy, Tata Power, Essar Power and Amalgamated Power are also in the fray for trading assignments.

A majority of the projects where traders are evacuating power are believed to be extremely viable in terms of tariff. The retail tariff for the Nagarjuna project is likely to be at around Rs 2.08 per unit, for Essar Power around Rs 2.20 per unit, while for the Jaypee group’s project, it would be around Rs 2.08 per unit, industry sources said.