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Home News Power Sector News Empowered Group of Ministers capped 3 UMPPs to single company

Empowered Group of Ministers capped 3 UMPPs to single company

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BrahmaThe central government has decided that one company can only implement up to three ultra mega power projects or UMPPs at any point in time in an attempt to ensure that these large projects , typically above 4000 MW, achieve financial closure and start generating electricity at the earliest. The move is likely to impact Reliance Power that has already bagged three out of four UMPPS bid out so far. "No company can work on more than three projects at a given point of time," power secretary HS Brahma told reporters after the meeting of the empowered group of ministers (eGOM) that met in Delhi late in the evening. Mr Brahma said that a company with three UMPPs could bid for a fourth only after work on one of the three is completed.

The secretary , however, did not exactly specify the conditions under which a company implementing three projects could bid for a fourth. A number of industry officials said the implementation of these guidelines depended on how the world ’completed’ was interpreted by the government.

One person suggested that commissioning 1,000 MW of capacity out of the 4,000 could count as completion.

Reliance-Anil Dhirubhai Ambani group company Reliance Power has been awarded three of the four UMPPs bid out by the government so far. Reliance Power has the mandate to implement ultra mega power projects in Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand). The fourth, at Mundra in Gujarat, has been awarded to Tata Power.

An official of Reliance Power refused to comment on the development saying that he is still to see the fine print of the eGOM decision.

Friday’s decision has been taken to prevent these projects facing financial problems. Each UMPP requires an investment of as much as Rs 20,000 crore and RBI norms on exposure limits restrict the ability of domestic institutions to provide funds to a particular sector or business group, which cause funding problems for these capital-guzzling power projects .

RBI caps the amount banks can lend to a particular company or to one sector. The government has planned a total of nine UMPPs, with four projects close to coal mines, and five in coastal locations . While four contracts have been awarded, the next batch of UMPPs may come up at Cheyyur (Tamil Nadu), Bedabahal (Orissa) and Akaltara (Chhattisgarh).

Besides three more projects are being considered , in Gujarat, Orissa and at a new site which is being finalised in Maharashtra. The eGOM also decide that number of UMPPs may be increased from originally proposed nine. The Maharashtra project, is finalised would be the tenth UMPP.

Source - economic Times

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