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Bids for mega power projects in Odisha, Tamil Nadu soon

Aug 25, 2013

SIDDHARTHA P. SAIKIA
The Hindu Business Line

NEW DELHI: The Government is finally ready to call bids for the 4,000-MW each Ultra Mega Power Projects (UMPPs) in Odisha and Tamil Nadu, thus, ending the uncertainty over the launch of greenfield mega power projects.

The Power Ministry will start the process within a month’s time. This decision comes after an empowered group of Ministers (eGoM), headed by Defence Minister A.K. Antony, on Friday gave its approval to the latest standard bidding documents that would facilitate the bidding process.

"Each of these UMPPs would cost around Rs 40,000 crore leading to a capacity addition of about 8,000 MW. The equipment makers would also be benefited as new order flows would come," a senior Power Ministry told Business Line.

The mega power projects will come up at Bedabahal in Odisha and Cheyyur in Tamil Nadu. Domestic equipment makers such as BHEL can expect fresh orders now. Power Finance Corporation Ltd (PFC) is the nodal agency for setting up of UMPPs. The Request for Qualification (RfQ) for the Odisha project was invited more than a year ago. However, because of non-finalisation of the bidding norms, the process could not be completed.

Nearly 20 companies have submitted RfQs for the power station. These include Jindal Power, Sterlite, JSW Energy, Nalco, Signature Energy, Welspun, Tata Power, NTPC, Jaiprakash Power Ventures, Torrent Power, L&T and Adani Power.

But, the earlier process will be scrapped and RfQs will be invited again, the Power Ministry official said.

The bidding process for the Tamil Nadu project was never started.

PROJECT SCRAPPED

Meanwhile, the Government has scrapped its proposal to set up a similar project at Surguja in Chhattisgarh as it did not get the required regulatory clearances. Nearly 22 companies had submitted RfQs for the Surguja power project, the highest number so far for a UMPP.

Other UMPPs are expected to come up in Jharkhand and Karnataka.

The Power Ministry expects the new norms to boost investors' confidence.

"These documents will take care of risk associated with fuel price volatility and fuel availability as the fuel has been made a pass through. At the same time, clarity has been brought in the termination and other generic provisions in the contract," the official said.

In addition, to cover the construction risk and termination risk of the lenders there is a proposal to cover debt due. The document also provides for compensating the investor by paying adjusted equity in the event of utility default.

At the same time, the document lays down standards of efficiency and performance for the power producers and provides for safeguards and regulatory oversight for incentivising efficiency and fuel management and procurement.

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