BBMB to earn from Carbon Trading with World Bank

CHANDIGRH: Bhakra Beas Management Board- a leading hydro power generation and transmission organization of the region has signed a Letter of Intent with World Bank for the sale of Certified Emission Reductions (CERs) expected to be generated through its Renovation, Modernisation and Uprating programme.

It would add an additional capacity of 94.44 MW from its Power Houses at Ganguwal, Kotla and Bhakra Left Bank.

On completion of this programme, it is expected to generate around 4,19,000 CERs upto 31st December, 2012 (with the existing commissioning schedule) and 1,14,000 CERs annually thereafter due to the improved efficiency of machines.

World Bank (as a trustee of many Carbon Funds) proposes to purchase, the first four hundred thousand (4,00,000) CERs  at a contract price of at least US$8 (eight US dollars) 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 (from the sale first 4,00,000 CERs) to BBMB, World Bank would deduct a maximum of $1,20,000 (one hundred and twenty thousand 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 - $ 23,50,000 (depending upon the completion schedule of R,M&U projects) if the ERPA is finalized beyond 2012 and upto 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 Emission Reduction Project Agreement (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 Government Sector of the Country to participate in such a venture. BBMB also plans to facilitate other utilities on this subject through its Consultancy Services.