The government has made clear that ultra mega power projects, now seven in number, are on track.
Sasan and Mundra projects are nearer to the goal of 4,000 mw capacity addition each.
NEW DELHI: The government has made clear that ultra mega power projects, now seven in number, are on track. Sasan and Mundra projects are nearer to the goal of 4,000 mw capacity addition each, with the signing of power purchase agreements between 22 distribution companies of nine states and shell companies Sasan Power Ltd and Coastal Gujarat Power Ltd for Mundra.
Union power minister Sushilkumar Shinde also announced that government-owned thermal power generator NTPC Ltd has been asked to set up a company on the lines of Bhel for meeting the equipment and project requirements over the 11th Plan Period.
It is not clear what will be the nature of relationship between the proposed equipment manufacturer and NTPC that plans to double its exiting power generation capacity to 21,941 mw by 2012 from the existing 17,333 mw.
NTPC chairman T Shankaralingam said the company is yet to take a view on the proposal and may enter into manufacturing of only certain categories of power equipment. “The idea is to shorten the tendering time,” he said.
When it comes to purchase of power from the two ultra mega power projects, that are moving ahead and are likely to be awarded by December 2006, Madhya Pradesh (1500 mw) and Gujarat (1900 mw) will be the major buyers.
Among the other states that will be buying power from the projects are Delhi, Uttar Pradesh, Uttaranchal, Punjab, Rajasthan, Haryana, Madhya Pradesh and Maharashtra. All the parties have committed an advance of Rs 1 crore for every 100 mw for their respective shares of power.
Shinde and power secretary RV Shahi ruled out the possibility of disputes since the tariff for power from the projects was yet to be decided, but said there will be regulatory and arbitration provision in the final contracts.
Within two months of selection of developer for the projects, escrow accounts will be established to service the power purchase agreements. In the even of default, direct supply to high tension consumers or other distribution licensees will be permitted under the provisions of the Electricity Act, 2003. The ultra mega power projects will add about 28,000 mw within a span of seven to eight years with an estimated Rs 1,25,000 crore investment.
The projects would be awarded to developers on build, own, operate (BOO) basis.
In order to enhance investors’ confidence, reduce risk perception and get good response to competitive bidding, shell companies have been set up as wholly-owned subsidiaries of Power Finance Corporation.
They will facilitate tie-up of inputs, linkages, clearances and water, land and power selling arrangements. The Centre, through state government, help will ensure coal linkages, environment and forest clearances, financial closure, execution of PPAs and proper payment security mechanism with state utilities and monitoring the progress of shell companies with regard to pre-determined timelines.
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