SECI gets a significant boost to its credit rating

  • Analysis of previous bids shows that tariffs for SECI tenders are higher by up to INR 0.20 – 0.50 (US¢ 0.30 – 0.75)/kWh in comparison to NTPC tenders;
  • refer). Inclusion in the tripartite agreement has led ICRA, a rating agency, to enhance SECI’s domestic credit rating from AA- to AA+ (SECI has emerged as India’s largest off-taker of solar power. It has already completed tenders for 4 GW of utility scale solar capacity and has a mandate to develop an additional capacity of 8 GW under the National Solar Mission. In contrast, NTPC has tendered 3 GW to private project developers and plans to allocate an additional 5 GW. However, as a relatively new organisation with no major operational assets or revenues, SECI has faced persistent concerns about its capability to cope with payment defaults by the DISCOMs despite being owned 100% by the Government of India.

    refer). BRIDGE TO INDIA’s analysis of bids in the last eighteen months shows that NTPC enjoys tariff discount of as much as INR 0.20 – 0.50 (US¢ 0.30 – 0.75)/kWh over SECI. To address private developer concerns, the Indian government has been building a payment security mechanism equivalent to 6 months of revenue payments to IPPs (We believe that the extended tripartite agreement is the most decisive and efficient way of dealing with SECI’s offtake risk perception. It would enable SECI to attract more interest in future tenders and bring down tariffs even lower.