Setback for development of UMPPs based on imported coal: MoEF mandates companies to undertake port studies for one year

In a setback to the development of 4,000 MW capacity ultra mega power projects (UMPPs), based on imported coal, the environment ministry has mandated companies to undertake port studies for one year, up from three months earlier, for getting its clearance.

The new rule will delay the bidding process of Cheyyur UMPP in Tamil Nadu, as it is based on imported coal.The port study for Cheyyur, which is to be conducted by the Special Purpose Vehicle (SPV) or the shell company formed by the Power Finance Corporation (PFC), the nodal agency for UMPPs in India, would only be completed by March 2011, a power ministry official said.He said Coastal Tamil Nadu Power Ltd (CTNPL), the SPV set up for Cheyyr UMPP, will be able to initiate the bidding process only after it has completed the study. 

"The whole process, port study, forest clearance, land acquisition and signing of power purchase agreement (PPA) with the buyers may take about one year and a half... Therefore, bids would be invited after that," the official said.  PFC had earlier planned to invite the bids for the Cheyyur project during the current financial year, but now it looks unlikely, he added.  CTNPL is responsible for getting all clearances before bids can be invited, and the lowest (price) bidder is awarded the project.   Pannaiyur Port, which is 5 km away from the main plant location, and 90 km from Chennai, has been selected for the project. The latest guideline by the Ministry of Environment and Forests, will also impact another UMPP that has been proposed for Maharashtra, the official said.  

So far, four UMPPs have been awarded to the successful bidders- Tata Power (Mundra, Gujarat) and Reliance Power bagged three such projects- Sasan (Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya (Jharkhand).   Of these, Mundra and Krishnapatnam UMPPs are based on imported coal, but they will not be impacted by the new rule, the official said.  Meanwhile, bidding for two UMPPs in Chhattisgarh (Sarguja) and Orissa (Bedabahal) have been delayed due to various environmental issues. Power Ministry has envisaged setting up UMPPs to add bulk power generation capacity in India in the 12th Five Year Plan (2012-17) to meet its goal of adding 1,00,000 MW during the period.