Govt not to cut UMPP’s capacity on ADB suggestion

Govt not to cut UMPP’s capacity on ADB suggestion

New Delhi: Government is unlikely to reduce the capacity of ultra mega power projects (UMPPs), from the present 4,000 MW, on Asian Development Bank’s (ADB) suggestion which had said that by doing so they would be able to lend financial support to such projects.

ADB had asked the Ministry of Power to consider reducing the size of UMPPs to 2,000 to 2,500 MW from current 4,000 so that more international financial institutions could lend their support.

“No, no intention as of now," says Power Secretary Anil Razdan when asked whether there was a plan to do so.

On the contrary, he said: “We do provide financial assistance to power projects, which are smaller in capacity than UMPPs."

Government has already awarded three UMPPs of 4,000 MW each — Sasan in Madhya Pradesh (MP), Krishna Patnam in Andhra Pradesh (AP) to Reliance Power and Mundra in Gujarat to the Tatas.

According to ADB, the UMPPs are high-value projects that need large amount of finance and the domestic private power sector companies are not fully equipped to take up such projects on their own.

Only state-run NTPC has the potential to develop such huge projects, it said.

Therefore, the government has the option of reducing the size of UMPPs to a smaller size (2,000 MW-2,500 MW) or look out for credible foreign sponsors to execute the UMPPs in collaboration with domestic parties who will hold minority position.

Government has decided to set up three more UMPPs in Tamil Nadu (TN), Maharashtra and Orissa.

It also plans to conduct studies at the sites suggested by the Karnataka government for the UMPPs.

The study regarding the availability of water for the identified site in Chhattisgarh is already under progress.

All three of the UMPPs awarded so far (Mundra in Gujarat, Sasan in MP and Krishnapatnam in AP) are expected to commission a few units aggregating about 3,000 MW within the 11th five-year plan (2007-12).

The fourth UMPP being set up in Tilaiya in Jharkhand, where bids have been invited, is in the process of identifying the selected developer would be completed by next month.