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Govt to review bidding process of ultra-mega power projects

business Updated: Jan 09, 2015 03:46 IST
HT Correspondent
ultra-mega power projects

The government has decided to review the bidding norms for setting up of ultra-mega power projects (UMPPs) in India while scrapping the bidding process of two UMPPs in Odisha and Tamil Nadu. The two projects involve an investment of over Rs 40,000 crore.

A committee of experts will be set up to review the setting up of UMPPs. “We will set up an expert committee that will guide us on how to move forward with these projects,” power and coal minister Piyush Goyal said on Thursday.

“It has been done (scrapping of bidding process) for proposed UMPPs in Tamil Nadu and Odisha...Unfortunately, we did not receive the response we expected,” Goyal added.

A UMPP is a large-sized coal-based power project with a generation capacity of 4,000 MW. It was conceptualised with the aim of providing cheaper power to more than one state.

So far, four UMPPs have been awarded (see graphic).

Private firms, which had participated in the first round of bidding for the two UMPPs in Tamil Nadu and Odisha, withdrew their bids citing difficulties in securing finances for these projects.

Concerns cited by private power producers included the bidding norms for UMPPs and the design-build-finance-operate-transfer (DBFOT) model where funding agencies are unable to secure exposure to the project.

Under the DBFOT model, developers have to transfer power plants to the government after expiry of the contract, a guideline opposed by lenders.

Private power companies, led by the Association of Power Producers (APP), had said in a letter to Goyal that the DBFOT model “relegates the developer to the status of a BOT (build-operate-transfer) contractor after he has brought in finance, technology and other inputs.”

For the Tamil Nadu UMPP, private companies in the fray included Adani Power, CLP India, Jindal Steel & power, JSW Energy, Sterlite Energy and Tata Power. Of these, four bought the request for proposal document but decided not to go ahead further in the process.

The Odisha UMPP saw nine interested bidders including Adani Power, CLP India, GMR Energy, Jindal Steel and Power, JSW Energy and Sterlite Energy.

After the private companies pulled out, only NTPC and NHPC were left in the fray.

Targetting an investment of Rs 10 lakh crore in renewable energy in six-seven years, Goyal said the government plans to add 100,000 MW of solar capacity and 60000 MW of wind power capacity in the next four-five years.