Six power majors to pull out of UMPPs unless bid terms revised
18 Jun 2014
As many as six of the nine companies that qualified to compete for two 'ultra mega power projects' (UMPPs) proposed by the union government in Odisha and Tamil Nadu have said they will walk out of the process unless the bid terms are reworked.
The Association of Power Producers, which represents the majority of private power companies, has written to power minister Piyush Goyal suggesting the bidding process should be stopped for a "comprehensive" review of the bid terms.
The Adani group, CLP, the GMR group, Jindal Steel & Power, JSW Energy and Tata Power are the companies that have expressed unwillingness to submit bids on the ground that the terms of the standard bid document would make the projects unviable.
The companies are also pushing for a review of the government's DBFOT (design build finance operate and transfer) model.
"Six out of the nine bidders for both Tamil Nadu and Odisha UMPPs (ultra mega power projects) have approached us to take up the matter with the power minister, stating that in its present form of DBFOT, it would be extremely difficult to further participate in the bidding process to submit price bid," association director-general Ashok Khurana said in the letter to Goyal which he has signed.
All the nine bidders have submitted initial bids for the two UMPPs, but are yet to submit the price bids.
Two of the remaining three companies are not members of the association. These are the state-owned National Thermal Power Corp – the country's biggest power producer – and the National Hydroelectric Power Corp, which has a near –monopoly on hydroelectricity. Larsen & Toubro is the only private company that is not a member of the association.
"We would appreciate if you could come out with a framework that serves the development aspect more predictably and facilitates comprehensive review of the SBDs and the DBFOT model," the letter said.
The standard bidding norms for the UMPPs were eased by the government last year to attract developers. Power Finance Corporation is the nodal agency for UMPPs in the country. So far, four UMPPs have been awarded, of which Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand) have been bagged by Reliance Power. Tata Power is operating the Mundra UMPP in Gujarat.
