Mumbai: The Centre is setting up four special purpose vehicles (SPVs) to pilot four mega power projects with initial capacities of 800 Mw each.

The SPVs will consult with commercial banks and financial institutions and prepare the project reports, sign power purchase agreements (PPAs) with respective state governments where the projects will be located, establish coal linkages, and put in place environment clearances before selling the projects to independent power producers (IPPs) through an international bidding process.

In effect the prospective buyers will get a package deal with all possible clearances and PPAs in place. According to sources, the Cabinet has already cleared the proposal and the inter-institutional group endorsed it last Friday.

The government will set up two of the projects at Champa (Chhattisgarh) and Singaroli (Madhya Pradesh). The other two locations could be Karwar in Karnataka and Surat in Gujarat. The government is also looking at Maharashtra and Andhra Pradesh.

Members of each of the SPVs will comprise a representative of the Power Finance Corporation (PFC) and two bureaucrats.

The projects, all coal-based, will be set up at coal pit-heads and along the coastline. The government has already initiated talks with the coal ministry to tie up fuel linkages.

The mega power projects will help the country reach the targeted 650,000 Mw of installed capacity by the 14th Plan (2026-27). The power ministry has been looking at a generation growth of 8 per cent per annum to reach this target.