New Delhi: The Union power ministry has asked state-owned NTPC Ltd, the country’s largest power company, to adopt a new approach while bidding for large power projects.
NTPC hasn’t won any of the four so-called ultra-mega power projects, or UMPPs, awarded by the government.
“NTPC has to do some innovative thinking since in future all new projects will be awarded through a bidding process,” said a senior government official who didn’t want to be identified. The ministry recently held a meeting with NTPC officials to find out why it failed to win any of the four UMPP contracts.
Faulty strategy? Jairam Ramesh, minister of state for power, said that state-owned power firms were at a disadvantage during bidding. Hemant Mishra / Mint
NTPC, which has unrivalled experience in setting up coal pit head power plants in the country, bid Rs2.12 and Rs2.39 per unit for the projects in Sasan in Madhya Pradesh and Tilaiya in Jharkhand, respectively. Anil Ambani-controlled Reliance Power Ltd won these projects by quoting Rs1.19 and Rs1.77 per unit, respectively.
The UMPP scheme of the ruling United Progressive Alliance envisages building large power plants, each with a capacity of 4,000MW and costing between Rs16,000 crore and Rs20,000 crore. The government sets up a company for each project, acquires land, identifies and allots coal mines in some cases to ensure fuel supply, and then, transfers this company to the successful bidder.
An NTPC executive, who declined being identified, however, defended his company’s strategy. “We have been very aggressive. That was a meeting for analysis as the power ministry is our well-wisher and wanted to know where are we going wrong. We see what is doable. There can always be improvement. Ultimately, NTPC will win this project.” The official was referring to a proposed 4,000MW project in Cheyyur, Tamil Nadu, which will be up on the auction block soon.
The government on Friday admitted in Parliament that public sector enterprises are at a disadvantage while bidding for UMPPs due to various “handicaps” and promised to remove these.
“We are looking into why public sector companies quote higher tariff. If government intervention is needed, we will do it,” Jairam Ramesh, minister of state for power and commerce, said while replying to questions in the Lok Sabha.
(‘PTI’ contributed to this story.)