Tough road ahead for UMPPs

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: The quest for power has been supersized. With power generation crucial to India’s economic growth, the ministry of power has put forward the development of ultra mega power projects (UMPPs) to add 36,000-megawatt generation capacity as a thrust area. The Central Electricity Authority (CEA) has identified nine such projects to be taken up. Four are at pithead and five at coastal locations in various states. Each project will generate approximately 4,000 mw and provide electricity at close to Rs 2 a unit.

Ambitious as the projects may sound, there are several innovative measures that the power ministry has initiated for them to go through smoothly. The ministry will coordinate with various ministries and agencies of both Central and state governments to help project developers with a single-window format.

Special purpose vehicles (SPVs) for each identified project have been set up. These nine SPVs are wholly owned subsidiaries of PFC. The SPVs are to carry out various activities on behalf of the project developers, including acquisition of land for the project, obtaining coal blocks for pithead projects, obtaining geological reports and other related data, and tie up the off-take and sale of power.

However, there are still many areas of concern to be sorted out before the full potential of UMPP schemes can be realised. While sites at nine states have been identified, land acquisition has been a problem. So far only projects at Sasan and Mundra have been commissioned.

The earliest that power will be generated from any of these projects is estimated to be August 2012, from Mundra. As implementation of these projects will be staggered, winning bidders will provide power in various unit sizes. These units will start operation phase-wise, so it could be close to 2020 by the time the complete 36,000 mw is commissioned.

Take for example the UMPP at Mundra. Tata Power will develop the project at a levellised tariff of Rs 2.26367 a kilowatt-hour. However, Tata Power will implement the project in five units each of 800 mw.