New Delhi: With the Congress-led United Progressive Alliance government running out of time on using the so-called ultra mega power plants to rapidly add to India’s power generation capacity, the power ministry is scrambling to try and jump-start stalled projects.
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The Union power ministry is now seeking high-level political intervention from states where the projects have been stuck over suitability of sites and has called for a tough-talk meeting of the five chief ministers in August.
Power minister Sushil Kumar Shinde will hold the meeting on 4 August with chief ministers of Chhattisgarh, Maharashtra, Orissa, Tamil Nadu and Karnataka. These are the states where the projects have stalled for reasons ranging from environmental concerns to differences with the state government.
Each ultra mega power project has a 4,000MW capacity and requires an average investment of Rs16,000 crore.
“The issues with the state governments have been stretched out for too long,” said a power ministry official, who confirmed the meeting but didn’t want to named. “We are going to make it pretty clear in this meeting to the states that either they expedite the process, or we abandon plans to set up the projects there and take them to the states which have shown more initiative. In the absence of state support, nothing can be done.”
To reduce risks associated with power projects and increase investor confidence, these projects call for the creation of special purposevehicles (SPVs), or firms that work with the relevant state government and local bodies to get land, and obtain requisite environmental and other clearances.
Eventually, these SPVs are transferred to the successful bidder. This makes the role of the state government critical in moving projects along.
Mint has previously reported several problems associated with these projects. Of the 10 proposed projects, only four are on track. Projects at Mundra in Gujarat, Sasan in Madhya Pradesh and Krishnapattnam in Andhra Pradesh have been awarded and the Jharkhand ultra mega power project is to be awarded shortly.
Those in Cuddalore and Marakkanam in Tamil Nadu, Jharsuguda in Orissa, Girye in Maharashtra, Tadri in Karnataka and Akaltara in Chhattisgarh are facing problems. In addition to these projects, the Centre has also proposed three more such large power projects in Orissa as reported by Mint on 3 April.
“If the (projects) get bogged down, they will have an immediate impact on state-level projects as a lot of states have taken a leaf out of the scheme and started awarding projects on similar lines,” notes Anish De, chief executive officer at Mercados Asia, an energy consulting firm.
Indeed, key ministers have been asking the states to get their act together. Finance minister P. Chidambaram in his Union Budget speech on 29 February, pointed out, “It is possible to bring five more ultra mega power projects in Chhattisgarh, Karnataka, Maharashtra, Orissa and Tamil Nadu to the bidding stage provided the states extend the required support. I urge them to do so.”
The government plans to help set up these projects inan effort to cater to rising demand for power in the world’s second fastest growing major economy at competitive rates. India has a power generation capacity of 143,000MW andexpects to add generation capacity of 78,577MW by 2012.