Nalco seeks consultant to help bid for UMPPs

Nalco, the government-owned aluminium major which announced a foray into the power sector in October 2010, is looking for consultants to help the company bid for the upcoming 4,000 mw ultra mega power projects (UMPP).

Nalco, according to sources, has shown interest in the upcoming Orissa UMPP and is also planning to bid for the next one expected to come up in Jharkhand, according to a source familiar with the development.

The company had invited expression of interest from consultants across the country in the end of January and is likely to finalise an advisor by the end of the current financial year.

“If you want to bid, you have to do it in the right earnest and with complete preparation,” said a company official.

He said the whole UMPP exercise is very competitive and calls for a huge investment.

So far only private players had been able to go through the strict scrutiny and have managed to quote the lowest tariffs.

“That is the reason why Nalco is looking for consultants to assist it as aggressively as any private player would,” the source said.
A UMPP is a mega single location power plant with the ability to generate 4000 mw of electricity per day.

It typically has eight boilers of 500 mw each or six boilers of 660 mw each. It is either built on the coastal areas to be able to run on imported coal or in land locked areas using high quality coal to run the plants.

These plants usually use supercritical technology for power generation, which makes the entire process more environment friendly and more efficient. To set up a UMPP, a company needs to invest approximately Rs20,000 crore.

Since it is based on international competitive bidding process, the company company which quotes the lowest tariff wins the bid to set up the power plant.

The land, water and coal linkage is offered by the government while the company has to set up and commission the plant within five years and run the plant typically for a period of 25-30 years.

So far the government has awarded four UMPPs out of which the first one has been to Tata Power and the rest has gone to Reliance Power.

These are being built at Mundra in Gujarat being built by Tata, Sasan in Madhya Pradesh, Krishnaptnam in Andhra Pradesh and Tilaiya in Jharkhand.

Power Finance Corporation (PFC) is the nodal agency for implementing the UMPPs.

The tariff rates of each of these UMPPs are Rs2.26 per unit for Mundra, Rs1.19 per unit for Sasan, Rs2.336 per unit for Krishnapatnam and Rs1.77 per unit for Tilaiya.

“During the entire bidding process, there are a lot of technical formalities that needs to be addressed. Besides, the nodal agency has several queries based on the bidding document which needs to be answered right so as to not lose the contract. Hence, these players for whom power is not the core business always prefer having a consultant on their sides to take care of the intricacies,” said an official working in one of the consultancy firms which has submitted EoI with Nalco.

He said the bidding process requires a dedicated team specialising in power which a company like Nalco is not expected to have being an aluminium player.

They also need the consultants to suggest whether a particular project, requiring crore of investment, would actually be feasible for the company or not, the official from the consultancy firm said.