BOOT model not suitable for power projects: Experts

Power Ministry has come out with draft norms for UMPPs,and BOOT model for new plants is among the major suggestions.

The Build-Own-Operate-Transfer (BOOT) model would not be suitable for setting up power plants in the country and could lead to complications in the sector,experts said on Thursday.

Noting that BOOT model would not work for the power sector,Jindal Power MD and Group CFO Sushil Maroo said the only source of revenue for power projects are electricity utilities.

He,along with others,was participating in a convention on ‘Standard Bidding Procedures for Case 2/UMPPs’,organised by industry body Assocham here. Ultra Mega Power Projects are have a generation capacity of 4,000 MW.

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In Case 2,the bidding is done on the basis of specific fuel used,and location.

The Power Ministry has come out with draft norms for UMPPs,and BOOT model for new plants is among the major suggestions. It has sought comments from stakeholders.

“Built Operate Own (BOO) model is better for the power sector than the BOOT,” SBI Capital Vice President Mukul Modi said. He added that BOOT model would have more complications.

As per the draft norms,a project developer has to transfer the assets to the utility after 30 years,which can be further extended by another 10 years.

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According to experts,power projects entail huge investments and could impact their sustainability in the long term if developers are required to transfer them to utilities. BOOT model is being successfully implemented in many highways projects.

Global consultancy Ernst & Young’s Director (Transaction Advisory Services) Seshan Balakrishnan also said that BOOT model would not be suitable for the power sector.

So far,four UMPPs — Sasan (Madhya Pradesh),Mundra (Gujarat),Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand) — have been awarded.