UMPPs in the cold storage, for now

Of the 16 projects envisioned, only 2 have been commissioned and 2 more are in the process of commissioning

Published: 31st May 2013 09:05 AM  |   Last Updated: 31st May 2013 09:05 AM   |  A+A-

The Government’s ambitious Ultra Mega Power Projects (UMPP) that were expected to add 10,000 MW by 2012 and help bridge the gap between demand and supply have come to a standstill as no single bid has been invited for UMPPs since 2005 when the plan was conceived.

India has always been an energy deficient country, despite having an installed capacity of nearly 2.23 lakh MW. At any given point of time the country’ power utilities produce just about 1.45 lakh MW.  While Tatas UMPP in Mundra, Gujarat has been commissioned, Reliance’s UMPP at Sasan will be commissioned by 2014.

The government had earlier envisaged awarding 16 UMPPs of 4,000 MW each that were to be developed by public, private partnerships through competitive bidding. But, after awarding four such power plants (three of which were won by Anil Ambani-led Reliance Power and one by Tata Power – see box) the UMPP programme has come to a halt for plethora of reasons such as environment clearance, fuel linkages, land acquisition, local issues etc.

“These projects were to be developed by private sector or public sector companies and the government was supposed to provide all essential linkages including government clearances, fuel linkage, land acquisition, but the economic downturn, delay in clearances and other impediments have all delayed the programme,” sources said.

According to sources in the Ministry of Power, of the 12 UMPPs that are yet to be awarded, three UMPPs including Krishnapatnam UMPP in Andhra Pradesh, Tadri UMPP in Karnataka and Girye UMPP in Maharashtra all stand deferred. While the fate of Surguja UMPP that was proposed in Chattisgarh remains uncertain.

“Power is no longer a preferred sector for investment as banks and FIs are not keen to invest in this sector,” the source added. “This is also delaying the whole process as investors are finding it difficult to raise capital for the project each of which will cost upwards of `15,000 crore to install.”

 “Since the government will form a special purpose vehicle (SPV) for these proposed UMPPs, we have to ensure that the bidders are offered site that are clear of all encumbrances and the fuel linkages are in place. Only then, can we ask corporates and public sector companies to bid for the UMPPS,” the official said on condition of anonymity.

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