In a major boost to infrastructure companies, the government on Tuesday relaxed the qualification norms for those interested in biding for ultra mega power projects (UMPPs).
“The total capital cost requirement in order to qualify for setting up the plant, has been brought down to 5% and keeping the economic slowdown in mind, the expenditure incurred by the companies on projects in the past seven years will be counted,” said Ashok Lavas, additional secretary, Ministry of Power.
Earlier, the criteria was kept at 10% of the proposed project.
Each UMPP, which has a capacity of 4,000 megawatts, is estimated to cost Rs25,000 crore.
This relaxation is expected to help infrastructure players compete with power companies in the bids for UMPPs.
State-owned Power Finance Corporation, the nodal agency for the UMPP projects, had floated tenders for qualification in September this year for Odisha and Tamil Nadu UMPPs. The Cheyyur UMPP in Tamil Nadu is based on imported coal, while the Odisha UMPP will run on domestic coal.
The last date for submission of request for qualification for the two projects is November 11.
The government has also asked bidders to include projects implemented by them over the past seven years, as against five years specified earlier, to qualify for the ultra mega power projects.
“We took record of the slowdown that impacted project implementation over the past five years and also the fact that power plants require huge capital, unlike projects like roads and highways.
We decided to change the clauses based on industry response,” said Lavasa.
Also, the fuel cost will be finalised at the request for proposal stage, as against the earlier norm of finalising it at the request for qualification stage. This has been decided to allow companies to make error-proof bids after calculating the risks involved in the project.
This fresh round of bidding for UMPPs comes after a gap of more than five years. The bidding for the last UMPP in Jharkhand was held in 2007.
The UMPPs awarded earlier had hit the environmental hurdle. But this time, all major clearances have been obtained, said Lavasa.
For the Odisha UMPP, Rs719 crore has been paid to the Odisha Government by the power procuring states towards cost of land and the award has already been made under Section 11 for the land. Three coal blocks — Meenakshi, Meenakshi-B and dip side of Meenakshi — have also been allocated for the project.
For the Cheyyur UMPP, too, all major clearances have been taken, said Lavasa.
Of the four UMPPs allotted so far, Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand were awarded to Reliance Power, while Mundra in Gujarat was awarded to Tata Power.
Still, not everyone’s convinced the relaxations will change much on the ground.
“No small company can go for this. Even if the govt has allowed it, the banks are not likely to fund such huge debt requirements. This round is most likely to go to companies like NTPC, L&T and Nalco. Smaller companies can participate, but it will be difficult for them to muster the equity required,” Debashish Mishra, senior director, Deloitte.