BBMB signs LoI with World Bank for sale of CERs

Chandigarh, Mar 5 (UNI) Bhakra Beas Management Board (BBMB), a leading hydro power generation and transmission organisation of the country has signed a Letter of Intent with World Bank for the sale of Certified Emission Reductions (CERs).

The CERs are expected to be generated through its Renovation, modernisation and upgrading (R, M, and U) programme which would add an additional capacity of 94.44 MW from its power houses at Ganguwal, Kotla and Bhakra Left Bank, a BBMB statement stated here today.

On completion of this programme, it is expected to generate around 4,19,000 CERs upto December 31, 2012, and 1,14,000 CERs annually therafter due to the improved efficiency of machines.

World Bank (as a trustee of many Carbon Funds) proposes to purchase the first 4,00,000 CERs at a contract price of at least eight dollar per CER and has agreed to bear all project preparation costs, including the cost incurred in relation to the preparation and review of the Carbon Finance Document, initial project assessment including due diligence costs, preparation of the project design document and the validation process and costs related to the negotiation and completion of the Emission Reduction Project Agreement (ERPA).

Out of the total revenue of 32,00,000 dollars from the sale of first 4,00,000 CERs to BBMB, World Bank would deduct a maximum of 1,20,000 dollars towards periodic verification, certification, preparation and submission of verification reports and project supervision costs. The revenue would further increase by around 20,00,000 dollars and even above (depending upon the completion schedule of R, M and U projects), if the ERPA is finalised beyond 2012 and up to 2015.

Within a period of 18 months termed as exclusivity period, all the formalities related to the registration of the CDM project with UNFCCC would be completed and an ERPA would be signed with World Bank as a formal contract for the purchase of CERs.

With this BBMB would be the first Hydro Power Utility in the government sector of the country to participate in such a venture.

BBMB also plans to facilitate other utilities on this subject through its consultancy service.

UNI