Over 45 prospective bidders opted out of the race for two projects

Anil Sasi

Tripping subjects

Promoters wary

of sops possibly not coming through if the States fail to adhere to the privatisation schedule.

Ministry turns

down promoters' plea on concessional duty on coal imports.

Task of

arranging fuel for a project of this magnitude.

New Delhi, July 4

Over 45 prospective bidders have opted out of the race for the first two of the five proposed ultra mega power projects for which the Government has initiated the bidding process.

Of the 74 players that had submitted EoIs (expressions if interest) for two of the 4000 MW-each projects, only 28 players have submitted request for qualification (RFQ) documents or initial bids for the two greenfield projects to come up in Madhya Pradesh and Gujarat.

According to private players, the tally could whittle down further at the RFP (request for proposal) stage the next stage in the bidding process as developers have raised concerns on whether they would be able to avail themselves of duty sops under the mega Power Policy.

Duty concessions under this policy are linked to a condition whereby the State, where the project is to come up, carries out certain reform measures including privatising power distribution in all cities with a population of more than one million within a stipulated deadline. With privatisation of power still a political hot potato in most States, promoters are wary of sops possibly not coming through if the States fail to adhere to the privatisation schedule.

Also, increased benefits sought by prospective players, such as concessional duty on coal imports as extended to LNG for the revived Dabhol power project, have been more or less turned down by the Finance Ministry.

The condition of 12 per cent free power from these projects, placed by States such as Chhattisgarh, has further added to the promoter woes.

Another serious concern is the task of arranging fuel. There are also payment security concerns in the light of the financial mess that States power utilities are in, especially since the Centre has ruled out guarantees for these projects.

Among the bidders left in the fray for the first two projects are the State-owned NTPC Ltd, Tata Power and Reliance Energy, while AES and China Light and Power are among the foreign players in the race.

The Centre has firmed up plans to develop five such projects across various States through the process of tariff-based bidding. The projects, including the pithead-based Sasan project in Madhya Pradesh and the imported coal-based Mundra project in Gujarat, are expected to entail investments of Rs 16,000 crore. Qualified bidders have been issued final bid documents and bidders will be given time till November 15 to submit the bids, according to the Power Ministry officials. The projects are slated to be awarded by the end of 2006 to the bidder who submits lowest tariff based bid. Initial bids for two more ultra mega projects in Maharashtra and Karnataka are also being invited, officials said. The ultra mega projects are part of the Government's initiative to accelerate addition of generation capacity from 1,25,000 MW to beyond 2,00,000 by 2012.

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(This article was published in the Business Line print edition dated July 5, 2006)
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