Ultra Mega Power Project

Introduction

Government of India has envisaged capacity addition of 100,000 MW by 2012 to meet its mission of power to all. It needs huge capacity addition during 10th & 11th plan, which is not feasible from the ongoing and proposed new projects already identified. As such there is need to develop large capacity projects at the national level to meet the requirements of a number of states under the competitive bidding guidelines dispensation. This will give a thrust to development of projects through competitive bidding. Ultra Mega Power Projects are steps in that direction. The projects will substantially reduce power shortage in future.

Recognizing the fact that economies of scale leading to cheaper power can be secured through development of large size power projects using latest super critical technologies. Ministry of Power, CEA and Power Finance Corporation are working in tandem for development of five projects under tariff based competitive bidding route. The Ultra Mega Power Projects with each having a capacity of minimum 4,000 MW, would have scope for expansion in future as well. The size of these projects being large, they will meet the power needs of a number of states through transmission of power on regional and national grids.

In order to enhance investor confidence, reduce risk perception and gets a good response to competitive bidding, it was deemed necessary to provide the site, fuel linkage in captive mining blocks, water and obtain environment and forests clearance, substantial progress on land acquisition leading to possession of land, through a Shell Company. In addition, Shell companies would also be responsible for tying up necessary inputs from the likely buyers of power. In addition shell companies would also facilitate tying up of power off takes from these projects with appropriate terms and conditions and Payment Security Mechanism.


Role of Ministry of Power

The role of the Ministry of Power is basically to serve as a facilitator and to co-ordinate with concerned Ministry/ Agencies for ensuring:

• Coal Block Allotment/ Coal Linkage

• Environment/ Forest clearances

• Required support from State Govt. Agencies

• Financial Institutions towards financial closure.

• To facilitate PPA and proper payment security mechanism – with State Govt./ State utilities

• Monitoring the progress of shell companies w.r.t predetermined timelines.


Criteria for selection of sites:

• Pit head location with domestic coal,

• Coastal location with imported coal,

• Coastal location with domestic/blended coal,

• Through a preliminary scrutiny by CEA of a number of potential sites identified in the country.


As of July 2009, 14 UMPPs have been planned in Karnataka, Chattisgarh, Madhya Pradesh, Andhra Pradesh (2), Maharashtra (2), Orissa (3), Tamil Nadu (2), Gujarat (2) and Jharkhand

State Location Capacity (MW) Awarded
Chattisgarh Akaltara
Gujarat(2) Mundra 4000 Tata Power
Karnataka Tadri
Madhya Pradesh Sasan 3960 Reliance
Maharashtra(2) Giriye
Andhra Pradesh(2) Krishnapatnam 4000 Reliance
Orissa(3) Lankahuda (Sundergarh district)
Tamil Nadu(2) Cheyyur
Jharkhand Tilaiyya 3960 Reliance

Of these, the ones planned in Chattisgarh, Madhya Pradesh, Orissa and Jharkhand will come up at pithead locations (near coal mines) and use domestic fuel, while the rest will come up in coastal locations with easy access to imported coal. On the request of the state governments of Andhra Pradesh and Orissa, two more sites have been identified, which consist of a pithead site in Ib-Valley coalfield in Orissa and a coastal site at Krishnapatnam in Andhra Pradesh. The contract for Mundra UMPP has been given to Tata Power while Sasan, Tilaiyya and Krishnapatnam contracts have been awarded to Reliance Power Limited, a part of Reliance Anil Dhirubhai Ambani Group.

Operational Cost:

The project is being developed with the intention of providing power to consumers at minimum cost. Because of the huge size of these power plants, the cost of the electricity would be lower due to theeconomies of scale. The plants are estimated to cost roughly Rs. 15,000 crores each to set up. The cost of generation per unit is estimated at under Rs. 2.00.


Special Purpose Vehicles:

Special purpose vehicles, or shell companies, have been set up as wholly-owned subsidiaries of the Power Finance Corporation Ltd. (PFC) in each of the above states to build, own, and operate (“BOO” in economic parlance) these plants.

The role of the Shell companies is to facilitate following activities:
  • Preparation of project report
  • Land acquisition
  • Allocation of fuel linkages/coal blocks.
  • Allocation of water by the state Govt.
  • Appointment of consultants for EIA & Project Report
  • Appointment of consultants for International Competitive Bidding (ICB) document preparation & evaluation.
  • Various approvals and statutory clearances.
  • Off-take/sale of power – section 63 of EA2003 provision.
  • Power Evacuation/ (Transmission) System.
  • Rating of Projects (suggested by FI’s in the meeting on 06.01.06)


The proposed shell companies are as follows:

  • Sasan Power Limited (Sasan, Madhya Pradesh)
  • Coastal Gujarat Power Limited (Mundra, Gujarat)
  • Coastal Karnataka Power Limited (Tadri, Karnataka)
  • Coastal Andhra Power Limited (Krishnapatnam, A.P.)
  • Coastal Tamil Nadu Power Limited (Cheyyur, T.N.)
  • Coastal Maharashtra Power Limited (Girye, Maharastra)
  • Orissa Integrated Power Limited (Sundergarh district, Orissa)
  • Jharkhand Integrated Power Limited (Tilaiya, Jharkhand)
  • Akaltara Power Limited (Aklatara, Chattisgarh)
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SUMIT KUMAR

Executive at India Electron Exchange

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