Friday, February 11, 2011

Govt plans to invite bids for Cheyuur project by Jul


The government plans to invite bids for a 4,000MW coal-based power project at Cheyuur in Tamil Nadu by July in the hope of restarting its so-called ultra mega power project (UMPP) scheme, which has been weighed down by ecological concerns and local resistance.

Power secretary P. Umashankar said environmental studies for the Cheyuur project are expected to be completed by April. “We expect to start the award process by June-July,” he said.

The project will rely on imported coal, whose price, including freight charges, are prone to fluctuations. It will thus be crucial for companies to secure coal supplies to bid for the project, as movement in international coal prices would impact input cost.

The Congress-led United Progressive Alliance government wants to set up 16 UMPPs, or power projects that produce at least 4,000MW each, to meet the needs of the world’s second fastest growing major economy after China. India has a power generation capacity of 169,000MW and expects to add 62,374MW by 2012.

Nine UMPPs were originally planned, but only four have been awarded—at Mundra in Gujarat, Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand. Two projects, at Girye in Maharashtra and Tadri in Karnataka, had to be abandoned due to local resistance. The bidding process of two others, located near coal mines at Bedabahal in Orissa and Surguja in Chhattisgarh, has been delayed.

Power Finance Corp. Ltd, the nodal agency for awarding UMPPs, extended the deadline for companies to respond to the request for qualification (RFQ) for the Orissa project for a fifth time on 31 January. The new deadline for submission of RFQ applications for the Orissa project is 31 March, and 8 March for the Chhattisgarh project.

“The RFQ deadline for the Orissa project has already been extended till 31 March. We are working with the MoEF (ministry of environment and forests) to find a solution,” said Umashankar.

The power ministry is working with MoEF on a compromise that would allow coal mining to fuel the Orissa project—in an exception to the government’s so-called “no go” policy for coal miners.

In June 2009, MoEF and coal ministry announced “go” and “no-go” areas for coal miners to protect best quality forests.

Mint reported on 26 November that MoEF is ready for a compromise to allow coal mining to fuel the Orissa UMPP.


UMPPs follow a competitive tariff-based bidding in which a special purpose vehicle (SPV) is set up to reduce risk perception and increase investor confidence. This SPV takes care of regulatory requirements such as land acquisition and environmental clearances and transfers these to the winning bidder. Each project requires an investment of around R
s.
20,000 crore.


“After the award of the first three projects, the whole process has taken enormously long,” said Anish De, chief executive at Mercados EMI Asia, an energy consulting firm. “The drive which was there for the earlier UMPP award process needs to be brought back.”

Source: Govt plans to invite bids for Cheyuur project by Jul - Home - livemint.com

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