Sunday, 1 March 2015

Red Carpet for pvt sector in power - 5 UMPPs

The Ultra Mega Power Plants (UMPP) of 4,000 mw each which recently saw private players pulling out of the bidding is likely to witness renewed interest. The finance minister Arun Jaitley in the union budget2015 announced five more UMPPs with an expected investment of Rs 1 lakh crore.

To invite private investment, the new UMPPs would be based on ‘plug & play’ model. This means that all the necessary clearances would be prior available and the successful bidder would just need to set up and operate the project.

The finance minister also announced that the auction for these UMPPs would be held in a transparent manner. Ministry of power cancelled the two year long bidding process of two UMPPs in Tamil Nadu and Orissa in December last year. The decision comes in wake of private companies pulling out of the bid process with PSUs NTPC and NHPC emerging as the only bidders.

In a letter to Power Finance Corporation, which was the convenor for the bidding, power ministry said that fresh bidding would be as per the new standard bidding documents. It is likely to be drafted in coming two months and power ministry would oversee the fresh bidding.

Private players had in their prior communications with the ministry of power has raised concerns on the Design, Build, Finance, Operate, and Transfer (DBFOT) model for the UMPP, and threatened it would not invest in the mega plan.

Sources in the know said that Piyush Goyal minister of state for coal, power and renewable energy wants the new bid document to be investor friendly and open to private sector participation.

Power sector is also included as one of the beneficiaries of the draft regulation to come for ease of doing business. An expert committee would draft new regulations for ‘Multiple Prior Permissions’ toppling the incumbent regulatory mechanism involving multiple agencies.


The decision announced to set up five more UMPPs is a progressive steps towards "Power to all".As you know that UMPPs generate electricity at a cheap rate with improvement in efficiency.Recently MoP cancelled the bids of UMPP (Tamil Nadu and Orissa),in which private investors withdraw from bidding process.Thus by introducing "Plug and Play"model in which all the necessary clearance will be provided prior to set up and operation of the plant.

Thus Private sector will be interested to invest in UMPPs.

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