If the investor turnout at Tuesdays pre-bid conference of the two new 4,000 MW ultra mega power projects (UMPPs) on the anvil at Bhedabahal in Orissa and Cheyyur in Tamil Nadu is anything to go by,the upcoming bidding process for these projects slated for later this year could herald a turnaround in sentiment in the fuel-starved power generation sector.
A total of 40 private players,including Tata Power,Jindal Power,Essar and Lanco,along with global equipment vendors such as GE and Siemens,turned up at the pre-bid event for the two projects here,coming at a time when developer interest has been petering out on account of a major fuel scare and delayed clearances.
Reliance Power was the only major player that did not attend todays pre-bid meet as it has been ruled out from the bidding process,having already bagged three UMPPs.
The renewed interest is also significant in the wake of these two new UMPPs being first lot of projects to be awarded after major changes incorporated in the bidding format which marks a shift from the earlier build-own-operate (BOO) model to the new design-finance-build-operate-transfer (DFBOT) format a move that had caused some worries among developers and investors alike.
At Tuesdays meeting,the major concerns flagged by the bidders include the status of survey and investigation for two of the three mines linked to the Orissa UMPP and worries about whether environmental clearances would come through sufficiently in time in case of land for both the projects and also for the Orissa mine.
Under the DFBOT model,imported coal costs are pass-through to the consumer,thereby insulating developers from the fuel risk in case of the Cheyyur project.
The Orissa UMPP at Bhedabahal is a pit-head based project for which coal would be sourced from three coal blocks Meenakshi,Meenakshi-B and Dip-side of Meenakshi in the Ib Valley coalfields in Orissa. The Cheyyur project is a coastal UMPP,with an integrated port for the purpose of importing coal.
Six years after the first lot of four UMPPs were handed over to private developers,all but one Tatas Mundra project are mired in disputes. Earlier this year,claiming a hit of over Rs 350 crore on account of change in law,Reliance Power applied for a hike in tariff for its Sasan power project the countrys first UMPP. The reasons cited in the petition,filed before the CERC on January 16,included a revision in water charges and hikes in excise duty and royalty on coal.
Reliance Power,which had bagged three of the four awarded UMPPs,had in mid-2011 stopped work on its Krishnapatnam UMPP in Andhra Pradesh invoking the force majeure clause. The company also sought increase in tariff from its Tilaiya project in Jharkhand citing factors that include the withdrawal of various duty exemptions and cost escalation on account of resettlement and rehabilitation programme.
In case of Tata Powers Mundra UMPP,a high-level panel headed by HDFC chairman Deepak Parekh recommended that buyers of power from the project,hit by the rise in Indonesian coal price,pay an extra tariff of 59 paise per unit. This was after the Central Electricity Regulatory Commissions April 2013 interim order allowing a compensatory package for the Mundra UMPP.
Distribution companies from Punjab,Haryana and Maharashtra,which are among the buyers from the project,have,however,refused to ratify the panels recommendations,leading to a stalemate.
bidding for the Orissa and Tamil Nadu projects,later this year,could herald a turnaround in sentiment in the fuel-starved power generation sector
The renewed interest is also significant as the two new UMPPs are first lot of projects to be awarded after major changes in the bidding format
major concerns flagged by bidders include the status of survey and investigation for two of the three mines linked to the Orissa UMPP and worries about whether environmental clearances would come through sufficiently in time