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New UserBidders may mortgage land, coal blocks for ultra-mega power projects
06 Jul 2015
Companies winning bids for ultra-mega power projects (UMPPs) will be allowed to mortgage land and the coal blocks attached to them if the government accepts recommendations of an expert panel.
The panel, tasked to review the standard bid documents for 4,000 Mw and above projects, has also proposed that developers be allowed to pass on the fuel cost to consumers.
The power ministry had constituted the panel under former central vigilance commissioner Pratyush Sinha after all the qualified private developers withdrew from the final round of bidding for two proposed UMPPs in Tamil Nadu and Odisha, The developers had cited difficulty in securing bank finance due to flaws in the bidding norms.
"It has recommended to the power ministry to invite fuel cost from bidders for the first year while second year onwards it will increase as per a formula of the Central Electricity Regulatory Commission," a government official said. "The fixed cost will be quoted for 25 years."
The official said the panel has acceded to most demands of private companies including the re-introduction of the designbuild-operate model for bidding of such projects in place of the existing designbuild-operate- transfer model, which has been opposed by the private developers.
The panel has also recommended creating two special purpose vehicles (SPV) for each proposed UMPP that can be mortgaged. While one SPV will own land and captive coal blocks, the other will own the rest of the infrastructure.
The panel has also suggested allowing the developers to pass through the cost incurred on resettlement and rehabilitation.
The government had to scrap the bidding for the two 4,000 MW UMPPs—in Cheyyur in Tamil Nadu and Bedhabahal in Odisha—after qualified private developers such as Tata Power, Adani Power, Jindal Power, CLP India,GMR Energy and Sterlite Energy withdrew from the final round of auction.
In its report given 10 days ago, the panel has also proposed restricting the role of the independent engineer, who was given the power to "interfere" in the earlier bid documents. An executive with Power Finance Corporation said fresh bidding for the two UMPPs is expected to start in the next three months as the government has begun final deliberations on the bidding documents.