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Business News/ Politics / News/  Punjab appoints PFC to help develop projects on UMPP model
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Punjab appoints PFC to help develop projects on UMPP model

Punjab appoints PFC to help develop projects on UMPP model

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New Delhi: The Punjab government has appointed Power Finance Corp. (PFC) to help it bid out a 2,000MW project using the ultra mega power project (UMPP) model. PFC is the nodal agency in charge of the Centre’s UMPP initiative.

Punjab, which generates a little more than half the power it needs, wants to adopt this model for power projects where the government acquires all clearances required for a project and then calls for bids from power generation companies. “We have been asked by the Punjab government to help them bid out the project on the same lines as we have been doing for the UMPPs. They want our help as we have developed a significant skill set while working on the UMPPs," a senior PFC executive who did not wish to be identified said. The Punjab project could require an investment of Rs8,000 crore.

“PFC has the expertise to undertake such an exercise and have already successfully demonstrated it in the case of UMPPs by awarding the three projects at Sasan (Madhya Pradesh), Mundra (Gujarat) and Krishnapattnam (Andhra Pradesh). With the project size being comparatively smaller in Punjab’s case, they would be able to do it more efficiently and in a faster manner," said a Mumbai-based power sector analyst who did not wish to be identified because he is not authorized by his company to speak to the media.

Punjab has a power requirement of 11,000MW, of which around 6,000MW is sourced from within the state. The state government has been exploring various ways to increase its power generation capacity. Mint had reported on 1 November that the state had appointed Rural Electrification Corp. as a consultant to help it start projects that involve the so-called case-I type of bidding where states do not have to get any clearances for the project.

UMPPs follow a case-II type of competitive tariff-based bidding where a special purpose vehicle (SPV) is set up which takes care of all regulatory requirements. The SPV then gets transferred to the developer who gets selected through the competitive bidding process.

The Union power ministry has been asking the states to develop power projects on their own, but based on the UMPP model to address power shortages in the country.

India has a power generation capacity of 1,35,006MW, which is insufficient to meet the growing needs of the world’s second fastest growing economy. Power shortages have been identified as a key infrastructure bottleneck and analysts say India will miss its target of adding 78,577MW of power generation capacity by 2012 because of shortage of equipment.

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ABOUT THE AUTHOR
Utpal Bhaskar
"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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Published: 31 Jan 2008, 11:58 PM IST
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