In 2006, they were seen as India’s answer to its crippling power woes. But, nine years later, only two out of the total 16 ultra-mega power projects (UMPPs) have been commissioned, raising questions about the viability of the model.
Only Sasan (Reliance Power) and Mundra (Tata Power) projects have been commissioned so far.
The delay has sparked a debate on the role of both the Centre and states, forcing some sections to suggest a review of the entire policy, including a radical slashing of the tenure of the power purchase agreements (PPAs).
On April 28, Jharkhand Integrated Power, a subsidiary of Reliance Power which had won the bid to build the Tilaiya UMPP, walked out of the agreement citing land acquisition problems.
Reliance Power said the PPA requires procurers — in this case the state — to hand over land for the power station, issue notice to acquire land for coal mines, and obtain clearance from the environment ministry. This was not done.
While the power ministry did not respond to queries, a senior ministry official said notices were issued to 10 procurer states, including Jharkhand. “Let the issue be settled between the developer and procurers. All procurers will have to take a view. Eventually, it will have to be bid out, not given away.”
Jharkhand chief secretary Rajiv Gauba said land transfer did take time. “When we talk of land, there is forest land, government land and land belonging to farmers that has to be acquired. Some land was transferred way back. For forest land also, the stage-II final permission was already in place. For acquisition of private land, rules were notified by March 30 and their (RPower) representative had met the deputy commissioner and had sought time till May 5. Therefore the exit at this time is something which the state government doesn’t agree with.”
In the case of the 4,150-MW Mundra project, although Tata Power was able to commission it within schedule, it was hit by environmental problems and the company’s inability to raise tariffs despite a steep hike in imported coal prices.
“We are losing Rs 1,500-1,800 crore annually due to the tariff issue,” Tata Power managing director Anil Sardana said. Besides, strong opposition from local fishermen, who had said that the project was hampering their livelihood, was also affecting development.
“I think 25 years as tenure of a tariff is too long. That has to have a re-look,” former power secretary Anil Razdan said. “No tariff is going to remain constant if you do not provide land for 10 or 15 years.”
Another former power secretary P Umashankar also said that the entire UMPP policy needed a re-look. The government can instead think of smaller projects of 2000 MW instead, he added.