Jharkhand to get a second UMPP

The coal-rich Jharkhand state is set to get a second ultra mega power project (UMPP) soon, with the power ministry clearing a project in Deogarh district, sources said.

This will be the seventh UMPP to be launched in the country. Major industry players like Tata Power, Lanco, Adani, JSW Energy, Indiabulls, Jaiprakash Group as well as public sector generator, NTPC, are expected to participate in bidding for the project which would offer a R20,000 crore investment opportunity. Unlike in case of normal power projects, the government is required to tie up key physical inputs like land, coal and water supply besides environmental clearance for the project before transferring it to the successful bidder.

Power Finance Corporation (PFC), the government’s nodal agency for auction of UMPPs, has initiated process for registering a requisite special purpose vehicle (SPV). On Friday, PFC board of directors gave its go-ahead for setting up the proposed SPV, sources said.

“We are going to register SPV for a second UMPP in the state of Jharkhand,” PFC chairman Satnam Singh confirmed to FE.

UMPPs, which have standard capacity of 4,000 mw each, are allocated through tariff bidding route. Reliance Power bagged the first UMPP allocated to Jharkhand – that is, Tilaiya.

Sources said the state government has assured to

provide land and water supply for the project. Coal availability has been confirmed in the Rajmahal coalfield area, which is at a distance of 170 km.

The Centre launched the UMPP scheme in 2005 to expedite capacity addition in the power sector and overcome the rising gap between demand and supply of electricity. It has envisaged development of a total of sixteen projects under the scheme. The government has auctioned four projects at places like Sasan in Madhya Pradesh, Tilaiya in Jharkhand, Mundra in Gujarat and Krishnapatnam in Andhra Preadesh, paving the way for total investment of R80,000 crore.

Meanwhile, bidding is on for two UMPPs, one in Orissa and one in Chhattisgarh. As of now, Jharkhand is the only state where the Centre has given the go-ahead for setting up a second UMPP.

The Planning Commission has recommended a special funding dispensation for UMPPs which need huge investments but carry relative fewer risks for lenders due to their stringent commercial terms relating to power supply.