Taking a cue from the Centre, the Madhya Pradesh government plans to expedite the process of awarding the 1,500MW Shahpura project in Jabalpur district of the state by following the ultra mega power project, or UMPP, model.
“We plan to issue request for proposal documents within three months for the project that may require an investment of Rs6,000 crore,” said a senior state government official who did not wish to be identified.
The other states that plan to follow this model include Punjab, Haryana, Rajasthan and Uttar Pradesh.
The Union power ministry had used this model to close out deals with private developers to build 4,000MW power projects in Sasan (Madhya Pradesh), Mundra (Gujarat) and Krishnapattnam (Andhra Pradesh).
The Madhya Pradesh government has set up a special purpose vehicle, or SPV, called Shahpura Thermal Power Co. Ltd that will obtain all regulatory clearances for the project.
The tasks to be completed by the SPV before awarding the project include land acquisition, environmental clearance, allocation of a captive coal block or fuel linkage and water linkage.
Along the lines of the UMPP model, the MP Power Trading Co. Ltd, the state government agency that buys power, will procure around 90% of the power from the project and take care of all the clearances.
UMPPs follow competitive tariff-based bidding where a SPV is set up to take care of all regulatory requirements.
The SPV then gets transferred to the developer who gets selected through the bidding process.
“A lot of power sector firms have shown interest in the project,” the official added.
The state government has stipulated that the first unit should be commissioned by 2012. The state has a power demand of 7,000MW against the availability of 5,000MW at present.
However, analysts are not sure about the outcome of this initiative.
“Assured power is an attraction for the states. Everyone is aware that clearances are a problem. Even the Union power ministry is finding it difficult to get the required clearances for its UMPPs. Taking an initiative is okay but I do not know how far the states will be successful following this model,” said K. Ramanathan, fellow at The Energy and Resources Institute.
The Union power ministry is working with the energy secretaries of various states to select developers through competitive bidding.
Earlier, state governments were not willing to subscribe to the model.
The Centre believes that since power shortages have been identified as a key infrastructure bottleneck, states can go a long way to help meet the country’s power generation demands by following this fast track model.