September 07, 2008

UMPP developers should not bid for another project - Report

Parliamentary Standing Committee on Energy has suggested that developers of ultra mega power project who have already bagged one project should not be allowed to bid for another on the basis of the same balance sheet on which the earlier project was won. However, it feels that if the balance sheet is so strong that it could meet the eligibility criterion for 2 power projects together they may be permitted to bid.

The committee, which laid its report in Parliament, feels that doing this would not only encourage competition but also ensure that projects are not monopolized by a few companies.

It has recommended that the ministry of power devise a formula, which assures a reasonable share of the power generated from the UMPP located in their state. It is of the opinion that a formula be devised taking into consideration various factors such as power shortage in the state and the status of infrastructure for evacuation of power, among others. The report states that “The allocation on the basis of a formula should be completely objective leaving no scope for any grievance from the states. Besides, the state governments should be involved in during the whole process of development of UMPP.”

At the moment, Reliance Power is developing the Sasan UMPP plant in Madhya Pradesh and the Krishnapatnam UMPP in Andhra Pradesh while TATA Power Limited is undertaking the development of the Mundra UMPP in Gujarat.