Jharkhand To Have Its Second UMPP

In a mission to increase the power generation capacity of Indian Inc, another Ultra Mega Power Plant (UMPP) has been announced. The new UMPP will be based in Deogarh, Jharkhand. This has caught our attention and we are accessing the progress of the UMPPs in India. The concept of UMPP was unfolded in 2005 in a bid to tackle the shortfall of power in India. As many as 16 UMPPs have been planned so far of which four have been awarded. The bidding process for two UMPPs is going on.

UMPPs are large-sized power projects based on thermal (coal) fuel. Each UMPP has a capacity of 4,000 MW. However, it is very disappointing to note that none of these projects are well on track and their original commissioning schedules have been amended. Of these four UMPPs, only 5 per cent of the installed capacity has achieved commercial operations so far (800 MW from the Mundra UMPP). Looking at the list of hurdles that the UMPPs will have to overcome, it does seem as if all the projects will still take too much time for completion.

From among the earlier UMPPs, those of Mundra and Krishnapatnam are based on imported coal as fuel. The Sasan and Tilaiya UMPPs are based on domestic coal but are yet to secure 100 per cent coal supply. The new regulation of benchmark pricing of coal in Indonesia has hurt the former two UMPPs severely and in fact such has been the impact that Reliance Power has stopped work at its Krishnapatnam UMPP, as reported by the Central Electricity Authority on January 24 this year.

Table 1 : Current Status Of The UMPPs

The good thing about the newly announced UMPP is that the coal, water and land requirement would be fulfilled by the government. In fact a coal block (Rajmahal coal field area) has already been confirmed by the state government. The company developing this UMPP will have some respite as the government has decided to become proactive in tackling the various issues related to the power sector.

The UMPPs use super critical technology to achieve higher levels of fuel efficiency, resulting in fuel conservation and less pollution. However, on this front any company developing a UMPP may have to bear custom duty of between 10-19 per cent on the import of power equipment from abroad. Any new entrant in the UMPP projects may also have to factor in the higher tariff revisions required in the future as the coal prices from here on are only going to go up.

According to media reports, Tata Power, Lanco Infratech, Adani Power, JSW Energy, Indiabulls Power, Jaiprakash Group and NTPC are expected to participate in the bidding process. We believe that Adani Power, NTPC and Tata Power may snatch this deal based on their performance in the area of project management.