Ultra power projects elicit 35 bids

Tata Power, Reliance Energy, GVK and GMR among those showing interest.

NEW DELHI: The US Exim Bank has approved an investment of $1 billion for the government’s proposed ultra mega power projects. The government has received 35 expressions of interest for three projects in Sasan in Madhya Pradesh, Mundra in Gujarat and Girye in Maharashtra that have made some progress in terms of basic clearances. The other two projects are to come up in Chhattisgarh and Karnataka.

“The US Exim Bank has approved an investment of up to $1 billion by Khanjee Holdings in one of these projects,” power minister Sushilkumar Shinde told newspersons in New Delhi.

The companies that have put in expressions of interest are Tata Power, GMR, GVK, Reliance Energy, Essar Power and Torrent. Among the foreign companies that have expressed interest are China Light and Power, Korea Electric, Mitsui, Suez Energy and Sumitomo Corporation.

These coal-based projects will have a capacity of 4,000 mw each. Shell companies have been set up to obtain all clearances for the projects and then pass them to private developers.

The project developers will be selected through a tariff-based bidding process. An evaluation committee headed by nominees of the financial institutions will be awarding the projects to companies or consortia offering the lowest tariffs to consumers.

The government has identified mines for captive fuel supply for three projects while two of the coastal projects will rely on imported coal. “We are soon sending a team to countries like South Africa, Indonesia and Australia, among others, to scout for coal concessions to ensure dedicated supply,” said Power Finance Corporation (PFC) chairman VK Garg.

Though the government has planned only five ultra mega projects, Orissa and Andhra have also sought to be included. If that happens, the number of projects will rise to seven.  Power secretary RV Shahi said the government was also encouraging state governments to set up 1,000-2,000 mw projects. The five projects will entail an investment of around $4-4.5 billion each.

Shahi said the government had assured a three-tier payment security mechanism, consisting of a letter of credit, an escrow account and the option of selling power directly to high-tension consumers in case of default.

Back from roadshows abroad, Shinde said unlike in the past, the Indian government was not looking to offer any guarantees to investors and project developers.

India is targeting to achieve power for all by 2012 with the current generation capacity of 1.25 lakh mw being short of demand by 10%.