The three final bids received for Krishnapatnam ultra mega power project is a pointer to a worrying situation in the power sector.
Out of nine pre-qualified bidders for Andhra UMPP, only three are in fray now
NEW DELHI: The three final bids received for Krishnapatnam ultra mega power project (UMPP) is a pointer to a worrying situation in the power sector. As international coal prices rise in line with the spike in other fuel prices, the lack of interest by other bidders could be due to tough tariff benchmark set by Mundra UMPP.
Larsen & Toubro (L&T), Sterlite and Reliance Power are the only three companies that submitted bids on October 24 out of the nine pre-qualified bidders for the project that is planned to come up in Andhra Pradesh.
Tata Power had quoted the winning tariff bid of Rs 2.26 a unit for the Mundra project, which analysts feel could be a tough call since unlike Tata Power most others in the fray do not have direct access to imported coal.
While L&T submitted bids for 4x1,000 mw, Sterlite has used 6x660 mw and Reliance 5x800 mw. A Power Finance Corporation (PFC) release said, “The company was of the view that the three bids from reputed companies are sufficient enough for competitive bidding which is the prime objective of ultra mega power project process.”
The benefits of this project shall be available in the 12th Plan, the statement said.
PFC is the nodal agency for UMPPs. Sources said the request for proposal submitted on October 24 was in two parts -- non-financial and financial.
While the first was “only to check on responsiveness” of the pre-qualified bidders, sources said the financial bids would be opened on November 13 which would decide the winner based on who quotes the lowest tariff.
“The delay in award of Sasan could not be the reason for the low level of interest in the Andhra project,” said a senior PFC executive.
Amit Kumar, a lawyer with Amarchand Mangaldas shared a similar view. “The bid documents have changed and looked into by all the companies. I don’t subscribe to the viewpoint (that Sasan delay was the reason). Each company makes its own assessment of viability,” he said.
Interestingly, with each of the three companies quoting different unit sizes it may become a tough call to decide on who may bag the project. “Since coal price will be linked to international prices, the companies may try to squeeze on equipment cost and tie up with Chinese companies,” said an industry watcher.
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