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Many ultra-mega power projects fail to take off, future uncertain

The government’s ambitious ultra-mega power projects (UMPPs) is now staring at a bleak future, as projects failing to take off, and the deadline for giving comments on new bidding norms for UMPPs expiring on September 1. Power players including Reliance and Tata have already shut their major projects.

business Updated: May 24, 2017 19:33 IST
Aman Malik
Aman Malik
Hindustan Times

The government’s ambitious ultra-mega power projects (UMPPs), once launched amid much fanfare and as an answer to India’s power woes, is now staring at a bleak future.

With projects failing to take off, and the deadline for giving comments on new bidding norms for UMPPs expiring on September 1, uncertainties are growing about the very concept itself.

According to recent reports, Anil Ambani-led Reliance Power Ltd has written to Power Finance Corp (PFC), asking it to buy out its UMPP in Sasan in Madhya Pradesh. The company has asked PFC to acquire the entire stake of its subsidiary Sasan Power Ltd, which operates the UMPP in Madhya Pradesh. Reliance Power had earlier exited the proposed UMPP in Tilaiya in Jharkhand.

“They had written a letter about a month back, which was followed up with a suit in the Delhi high court, in which PFC also is a party,” a senior PFC official told HT on the condition of anonymity. “They have no case against us, yet they have made us a party (to the case),” he added.

In 2005-06, the government first kicked off a policy to set up 16 power plants of 4,000 MW each. But issues related to land acquisition, environmental problems and the availability of coal have been major roadblocks, and till date only two projects have actually taken off.

Reliance Power, which was awarded three of the four UMPPs, has been protesting the cancellation of the Chhatrasal coal mine. The mine was taken back in May after the government said that it was ‘surplus’ for Sasan UMPP. Following this, the company challenged the government’s decision and the matter is currently in court.

A Reliance Power official said that the letter was written before the company moved the Delhi High Court, and forms a part of the petition. The power and coal ministries are the other respondents. A government spokesperson declined to comment on the issue.

In fact, even Tata Power, which operates the only other functioning UMPP at Mundra in Gujarat, has been demanding an increase in tariff. The project has also been hit by environmental issues.

After coming to power, the Narendra Modi-led government had set up a panel under former chief vigilance commissioner Pratyush Sinha to overhaul the bidding norms for UMPPs. Based on its recommendations, the government has proposed various changes, including forming two special purpose vehicles, one each for operations and infrastructure, in order to set up UMPPs.

The Centre has said in the past that it is willing to be flexible in order to attract investments into the power sector. In May, power minister Piyush Goyal told HT that a project size of 4,000 MW was not sacrosanct.

First Published: Aug 30, 2015 23:13 IST