In­dia to auc­tion mega hy­dropower projects

The Pak Banker - - BUSINESS -

In­dia is plan­ning to of­fer new hy­dropower projects with all ap­provals and land-use rights in a bid to mit­i­gate risks and at­tract in­vestors. The plan is sim­i­lar to the Ul­tra Mega Power Projects or UMPP model that are in vogue for ther­mal power projects.

In­dia is try­ing to make hy­dropower projects at­trac­tive as part of its com­mit­ment at the lat­est Paris cli­mate con­fer­ence to cut car­bon emis­sions by 30-35% by 2030.

"We are look­ing at the pos­si­bil­ity of UMPP-style hy­dropower projects that in­vestors will find at­trac­tive," power sec­re­tary P.K. Pu­jari said.

The govern­ment be­lieves that it is es­sen­tial to have a model that ad­dresses the risks in­volved in large, cap­i­tal in­ten­sive and re­source-un­cer­tain hy­dropower projects. At present, th­ese ac­count for only 15% of the coun­try's 284 gi­gawatt (GW) ca­pac­ity, com­pared to fos­sil fuel-based ca­pac­ity ac­count­ing for 70%. Though the govern­ment at­tempt to set up 4,000 MW ca­pac­ity UMPPs in ther­mal power has yielded mixed re­sults, ex­perts see merit in the model. While Re­liance Power's Sasan pro­ject in Mad­hya Pradesh and Tata Power's Mun­dra pro­ject in Gu­jarat are op­er­a­tional, Re­liance's Kr­ish­na­p­at­nam pro­ject in Andhra Pradesh and Tata's Ti­laiya pro­ject in Jhark­hand are stuck due to is­sues re­lat­ing to coal avail­abil­ity and land ac­qui­si­tion, re­spec­tively.

Kameswara Rao, Part­ner-Grid at con­sul­tancy firm Price­wa­ter­house­Coop­ers, the

said UMPP model was suc­cess­ful in de­liv­er­ing large, ef­fi­cient projects at very com­pet­i­tive pric­ing. "The fail­ures hap­pened where pre-de­vel­op­ment ef­forts were cut to has­ten the process, or where stake­hold­ers could not col­lec­tively re­spond to un­ex­pected events," said Rao.

De­lays by states in fi­nal­iz­ing pro­ject sites and land ac­qui­si­tion, and changes in in­ter­na­tional norms for coal im­port have also af­fected UMPP projects in Tamil Nadu, Kar­nataka and Gu­jarat. To re­gain in­vestor in­ter­est, the govern­ment has mod­i­fied the bid­ding doc­u­ment to set up the pro­posed UMPPs (ther­mal) at Bed­aba­hal in Odisha and Cheyyur in Tamil Nadu, which were ear­lier can­celled due to luke­warm in­dus­try re­sponse.

Th­ese Rs.27,000-crore, 40,000 MW projects would be auc­tioned soon. For large, cap­i­tal-in­ten­sive hy­dropower projects too, the risks are high. "The govern­ment's best ap­proach here is to un­der­take pre-de­vel­op­ment ef­forts, such as in hy­drol­ogy stud­ies, lay­ing ac­cess roads and build­ing trans­mis­sion, and se­cur­ing power sale agree­ments.

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