New 4,000-Megawatt Ultra-Mega Power Projects Under Way in India as Older Proposals Are Shelved

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Researched by Industrial Info Resources (Sugar Land, Texas)--In addition to the earlier proposed ultra-mega power projects (UMPP) in the country, India plans to set up three more and has already identified and finalized sites in the states of Maharashtra, Orissa and Tamil Nadu. The additional UMPPs will be set up in Munge, Sindhudurg, in Maharashtra; Bedabahal, Sundargarh, in Orissa; and Cheyyur Kanchipuram, in Tamil Nadu. Tamil Nadu plans to set up a captive port in Paramankeni to develop the proposed project. Request for Qualification (RFQ) processes for the Cheyyur and Munge projects are likely to begin in March 2009, and project contracts are expected to be awarded within one year.

In March, Orissa was reported to have agreed to a proposal by the central government to set up three more 4,000-megawatt (MW) coal-based pithead UMPPs in the state at a total cost of $12 billion. Five coal blocks in the state with aggregate reserves of 2.1 billion tons have been identified to support the three additional projects, which are being considered in addition to the originally proposed project in Jharsuguda. A developer has not been selected. The state will utilize half of the power generated by the three new UMPPs, and surplus power will be sold to neighboring states.

The government had initially proposed to set up 10 4,000-MW UMPPs in the country. Tata Power Company Limited (BOM:500400) (Mumbai) is setting up a UMPP in Mundra, Gujarat, while Reliance Power Limited (BOM:532939) (Mumbai) has secured contracts to set up UMPPs in Sasan, Madhya Pradesh, and Krishnapatnam, Andhra Pradesh. With the development of the three UMPPs under way, the government expects to add 3,000 MW of power generation capacity from these projects by the end of the ongoing Eleventh Five-Year Plan Period (2007-12).

A bidding process for the development of the fourth UMPP, in Tilaiya, Jharkhand, is slated to begin later this year. The RFQ process will begin on November 4, and a firm will be selected by November 28. Power Finance Corporation Limited (BOM:532810) (New Delhi) has shortlisted 11 out of 13 companies that had sought qualification for the bidding process:

1. The AES Corporation (NYSE:AES) (Arlington, Virginia)
2. Essar Power (Mumbai)
3. GVK Power and Infrastructure Limited (BOM:532708) (Secunderabad, Andhra Pradesh)
4. Jindal Steel & Power Limited (BOM:532286) (New Delhi)
5. Lanco Infratech (BOM:532778) (Hyderabad, Andhra Pradesh)
6. Larsen & Toubro (BOM:500510) (Mumbai)
7. National Thermal Power Corporation (New Delhi)
8. Reliance Power
9. Sterlite Industries India Limited (NYSE:SLT) (Tuticorin, Tamil Nadu)
10. Tata Power Company Limited (BOM:500400) (Mumbai)
11. Torrent Power Limited (BOM:532779) (Ahmedabad, Gujarat)

Citra Thermal Power and Malaysia-based Dian Wijaya did not qualify to participate in the bidding process because of incomplete information.

Although the government has yet to award contracts for the UMPPs in Cuddalore, Tamil Nadu, and Jharsuguda, Orissa, it has decided to shelve the proposed UMPPs in Akaltara, Chhattisgarh; Tadri, Karnataka; Girye, Maharashtra; and Marakkanam, Tamil Nadu because of various reasons including environmental issues and differences with the respective state governments. The central government had approached the state governments of Chhattisgarh and Karnataka to set up alternate UMPPs. Chhattisgarh has been lukewarm in response to the proposal. Karnataka's government has proposed several sites for a UMMP, but the central government has not conducted feasibility studies on the proposed sites, none of which are in coastal zones.

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