'Go, No-go' Ghost Still Haunts Chhattisgarh Ultra-Mega Power Project

Researched by Industrial Info Resources India (New Delhi, India)--A year after the government of India scrapped the controversial "no-go" policy, which had banned coal mining in certain areas in India, state-run Power Finance Corporation (BSE:532810) (PFC) (New Delhi, India) is still awaiting a response from build-operate-own-transfer (BOOT) developers for the execution of the 4,000-megawatt (MW) Surguja Ultra-Mega Power Project (UMPP) in Chhattisgarh, a state in central India. Most of the private-sector developers seem to be skeptical about the viability of the project, which has been proposed to be developed at the Salka and Khameria villages in the Surguja district of the state. A formal go-ahead on mining from the country's environment ministry is still pending.

The project is linked to the coal blocks located in the Hasdeo Arand coal field area, a major part of which was declared "no-go" in 2009. Since then, the bidding dates for the UMPP have been revised on several occasions. The ministry had restricted mining activities in a total of 203 coal blocks, with an estimated minable reserve of 660 million tonnes.

Recently, PFC has issued a fresh notification extending the initial bidding deadline by another three months. The bidding for the project has been held up since March 2010, pending the environmental and forest clearances.

The government of India, through PFC, has so far allotted four such UMPPs, of which contracts for three projects--Sasan UMPP in Madhya Pradesh, Krishnapattnam UMPP in Andhra Pradesh, and Tilaiya UMPP in Jharkhand--have been awarded to Reliance Power Limited (BSE:532939), while Tata Power Company Limited (BSE:500400) is developing the Mundra UMPP in Gujarat.

PFC is the nodal agency appointed by the government of India for the execution of UMPP projects in the country. As per UMPP guidelines, PFC floats requests for qualification (RFQs) to shortlisted bidders on the basis of technical capabilities. Subsequent to this first round of the selection process, under the international competitive bidding process, qualifying bidders are invited to submit final financial bids.

PFC facilitates various statutory clearances, such as land, water, and environmental and forest clearances for the UMPPs, while the developers are required to arrange for finance, project management, acquisition of the necessary consents, and permits, in addition to the design, engineering, construction, erection, testing, commissioning and procurement of equipment and materials for the project.

Details of RFQ deadlines, bidding processes, and the planning and construction phases of India's UMPPs are available in Industrial Info's International Power Industry Database.

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