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Govt Considers Extending Timeline for PPAs Under Mega Power Policy to Benefit Power Plants

The Indian government is contemplating a 2-3 year extension for power projects awarded under the Mega Power Policy that have not yet signed Power Purchase Agreements (PPAs) or have only partially signed agreements with distribution companies. This move aims to provide more time for power plants to finalize PPAs and secure the release of approximately Rs4,000 crore in bank guarantees.

The extension would benefit at least six power plants with a combined planned capacity of around 8 GW, although only about 4 GW of capacity remains to be tied up due to pending or incomplete PPAs. Affected plants include DB Power's Baradhara unit, Adani Power's Raikheda unit, RKM Powergen's Uchpinde unit, and IL&FS Tamil Nadu Power's Cuddalore unit.

This policy adjustment comes in response to the limited number of bids issued by states, delaying PPA signings. However, with power demand improving, states are now more willing to enter into long-term agreements, which aligns with the government's plan to meet the rising demand for power. The Mega Power Policy offers fiscal benefits such as customs duty exemptions on equipment and tax incentives, and this extension aims to help developers comply with these provisions and complete their projects.