Bids for the 4,000 MW Ultra Mega Power Project, which needs an investment of about Rs 18,000 Crore
The Union government plans to call this month the next round of bids for the 4,000MW power plant at Tilaiya in Jharkhand, but a person familiar with the project claims it poses significant environmental problems that have been glossed over.
"Tilaiya project has no water. In order to provide water linkage, the dam's height needs to be raised which in turn will submerge 20 villages," added this person who did not want to be identified, referring to the Tilaiya dam over the Barakar river. "Even the transport corridor for the project will pass through forest land. This issue is yet to be resolved." The person said Water and Power Consultancy Services Ltd, a public sector undertaking with expertise in dam surveillance, power and infrastructure, was asked to study the issue of water supply to the project and had recommended spending Rs350-500 crore to strengthen the Tilaiya dam.
"This amount is for increasing the height. Everyone knows it," the person added.
Eleven developers had qualified for the so-called request for proposals stage, or the sec ond stage of bidding for the plant, one of the so-called ultra mega power projects launched by the Union government to accelerate the addition of power generating capacity in the country. Of the 11, nine companies have purchased the documents for the next stage of bidding: NTPC Ltd, Essar Power Ltd, Reliance Power Ltd, Tata Power Co. Ltd, Larsen and Toubro Ltd, Jindal Steel and Power Ltd , Sterlite Industries (India) Ltd, Lanco Infratech Ltd and Citra Thermal Power and Infrastructure Ltd. Lanco has bid along with Malaysia-based Genting Sanyen Power Sdn Bhd.
The Tilaiya project was to have been awarded by 23 June.
This was deferred and the last date for the submission of second-stage bids was extended to 4 November. The government has said it will award the project by December.
A senior government official associated with the Tilaiya project said there was no problem with water supply. And information on the website of Power Finance Corp. Ltd (PFCL), the state-owned firm responsible for all ultra mega power projects, says: "The site has been examined for environmental aspects and found to be compatible with various eco-sensitive landmarks."
The Tilaiya plant has already faced hurdles related to the law and order situation in Jharkhand—a state where there is significant Naxalite activity—and land acquisition which could lead to the displacement of tribals.
These issues are largely to blame for the delay, said Anish De, chief executive at Mercados Asia, an energy consulting firm.
The United Progressive Alliance government planned to set up 10 ultra mega power projects across the country. So far, three have been awarded— Mundra project to Tata Power and Sasan and Krishnapatnam projects to Reliance Power.
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Tata Power, Essar Power, L&T opt out of Tilaiya
BS Reporter / New Delhi December 30, 2008, 0:39 IST
Reliance Power, Lanco, NTPC submit technical bids.
Four companies, including India's largest private sector electricity generator Tata Power and infrastructure major Larsen & Toubro Ltd, chose not to bid for the Rs 16,000-crore ultra mega power project (UMPP) in Tilaiya in Jharkhand even as Reliance Power, Lanco Infratech and NTPC Ltd, the country's largest power producer, submitted their technical bids today.
Jindal Steel and Power Ltd and Sterlite Industries were the other two firms which bid after buying request for proposal documents in May this year. A total of nine companies had bought these bid documents.
Essar Power, part of the telecom-to-oil Essar group, and Citra Thermal Power and Infrastructure Ltd had bought bid documents but did not bid.
"If everything would have been normal (referring to the current financial turmoil), we could have more bidders. But under the circumstances, five bids placed for the project is in itself an achievement," said Jairam Ramesh, minister of state for power. "The project is expected to be awarded in a month's time from now," Ramesh added.
The financial bids, indicating the tariffs at which electricity from the 4,000-Mw Tilaiya project would be sold, are expected to be opened in a fortnight, after which the project would be awarded to the company that offers to sell power at the lowest price. The technical bids, in which the bidder mentions his technical capabilities for implementing such a project, were opened today.
Experts say five companies bidding for the mega project in the middle of a financial turmoil is a healthy sign. "Five bids received for a multi-crore project like Tilaiya out of nine is a good response keeping in view the current economic situation," said a senior official from Power Finance Corporation (PFC), the nodal agency for implementing the UMPPs.
Three companies had bid for the last UMPP offered at Krishnapatnam in Andhra Pradesh.
Essar Power, one of the four companies which had bought the bid documents but did not submit a bid, said its current capacity under implementation was large enough for the time being. "We will take up only that much (project capacity) which we can execute. We are too tied-up in other projects," said a senior official from Essar Power.
The bids for the Tilaiya project come at a time when a financial crisis is making it difficult for companies to get loans from banks to fund projects. The credit crunch has also driven up interest rates to 14 per cent — 15 per cent from around 11 per cent — 12 per cent a year ago.
The government is, however, planning to ease the lending norms for banks and financial institutions so that they can provide funds for the UMPPs. Demand for electricity in India is growing at around 10 per cent every year, but generation continues to be less than demand.
For the Tilaiya project, experts estimate companies to bid between a range of Rs 1.19 and Rs 2 per unit of power sold.
Tilaiya will be the fourth UMPP to come up in the country under the public-private partnership route through tariff-based competitive bidding. Reliance Power has bagged two of these UMPPs, at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh, while Tata Power bagged the Mundra UMPP in Gujarat.
The project is a part of the government's UMPP scheme under which it proposes to set up 13 UMPPs to increase India's power capacity by above 50,000 Mw by the end of 2017 in order to fill the electricity demand and supply gap in the country. India has envisaged a capacity addition of 100,000 Mw by 2012 and the achievement of this target requires the development of large power projects like UMPPs.
Five power generation firms including state-run NTPC and Anil Ambani-led Reliance Power on Monday submitted bids for the 4,000 MW Tilaiya Ultra Mega Power Project in Jharkhand, which needs an investment of about Rs 18,000 crore.
Other companies that submitted bids at the close of the submission process today included Lanco Infratech, Jindal Power and Sterlite Energy, sources said.
The process of selecting the developer of the UMPP is likely to be finalised in 15 days, they said, adding that the qualifying technical bids were being opened this evening.
The final financial bids will be opened within 15 days.
Officials said that only a handful of companies out of the 11 pre-qualified bidders submitted bids in the midst of a global financial crisis and the prevalent liquidity crunch.
Power Finance Corporation (PFC), the nodal agency for Ultra Mega Power Projects, will verify the bid documents of the companies.
The companies have to produce details such as the schedule of the project's commissioning date, and a minimum bid guarantee of Rs 120 crore.
The cost of the project is estimated to be around Rs 16,000-18,000 crore, with a debt-equity ratio of 70:30 and the project is expected to come up during the XIIth Five Year Plan (2012-17).
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