Date:22/02/2006 URL: http://www.thehindubusinessline.com/2006/02/22/stories/2006022201811100.htm

Back Pvt players keen on ultra mega power projects

Our Bureau

POWER PACKED MEET: The Union Minister of Power, Mr Sushil Kumar Shinde (right), with the Power Secretary, Mr R.V. Shahi, and the SBI Chairman, Mr A.K. Purwar (left), at an ultra mega power projects bidders' conference in the Capital on Tuesday. — Kamal Narang

New Delhi , Feb. 21

The Government's plan to set up five `ultra mega' thermal power projects of 4,000 MW each has generated considerable interest among private players.

A host of top companies, including Tata Energy, Aditya Birla Group, RPG Group, Reliance Energy, L&T, Alstom, China Light and Power, Mitsui & Company and Suez Energy, were among the project developers who turned up at a bidders' conference to discuss the modalities for executing two of these projects.

Besides these players, public sector firms such as NTPC and lending institutions PFC and SBI took part in the pre-bid meeting for the projects that would be located at Sasan in Madhya Pradesh and Mundra in Gujarat.

"We are trying to address concerns of developers about issues like fuel, water availability and environment clearances to enhance their confidence and reduce risk perception," the Power Minister, Mr Sushil Kumar Shinde, said here. The payment security mechanism, the option of selecting technology and unit size, and technical and financial parameters for bidders were discussed at the meeting, but a final decision on many of these issues has not been taken.

Private developers have sought concessions, including tax benefits, a higher debt-equity ratio, an option to choose the unit size, mega power status and a payment security mechanism to ensure project viability.

While the Government has specified that the projects would be set up in a debt-equity ratio of 70:30, some of the private players have suggested a higher debt component for these projects.

The five private companies have been incorporated as PFC's subsidiaries for executing each of the 4,000 MW projects and CEOs have been appointed for these companies. The five companies — Sasan Power Ltd (in Madhya Pradesh), Akaltara Power Ltd (in Chhattisgarh), Coastal Gujarat Power Ltd, Coastal Karnataka Power Ltd and Coastal Maharashtra Power Ltd — will be transferred to foreign or domestic promoters through a bidding process based on the least first year tariff quoted, the Government officials said.

The projects, each of which is expected to cost around Rs 15,000 crore, have got a shot in the arm with the Ministry of Coal giving an `in-principle approval' to allot coal blocks to the projects, officials involved in the exercise said. State Governments have been advised by the Centre for providing the necessary support for developing the projects, most of which are likely to be executed, using super critical technology units with a unit size of 800 MW each. The projects, according to Government officials, will reap economies of scale and enable quick capacity addition, leading to cheaper power. The projects are likely to generate electricity at a cost of Rs 1.50 to Rs 1.80 per unit, the officials said.