PFC announces extra cost for additional projects

Mumbai: There is no restriction on the number of Ultra Mega Power Projects which power companies can bid.

However, for every additional project the company will have to pay an extra Rs 150 crore as performance bonds, said Dr V.K. Garg, Chairman and Managing Director, Power Finance Corporation Ltd.

He was addressing mediapersons on the occasion of the fourth quarter results of the company.

Dr Garg said that the Rs 300-crore performance bond for the first project will increase to Rs 450 crore for the second project and Rs 600 crore for the third.

If the companies default on the projects the proportion of penalty would be 100 per cent, he said.

PFC and the Power Ministry have been debating over the ‘number of mega power projects’ which power companies can bid for, as one ultra mega projects cost over Rs 20,000 crore.

Dr Garg said that the issue was discussed in detail by an inter ministerial group consisting of power, law and finance ministries. “There is no restriction on any company from bidding for any number of mega power projects. But to discourage companies from bidding for more than one project, we have performance bonds, whose amount will multiply with every additional project. The obligations and penalties will also multiply accordingly,” he said.

Dr Garg said that currently nine UMPPs have been planned for but if new projects can tie up fuel linkages, water supply and land then the number projects could increase to even 20, he said.

Updating on the planned UMPPs, Dr Garg said that the request for proposal for the Jharkhand-based Tilaiya UMPP would come up by May. The site problems of Girye UMPP in Maharashtra still continue. PFC has written to the Maharashtra Government and the State Government is working out an alternative site. If the issue of water land and fuel gets resolved at the new site then the project can move forward, he said.

The request for proposals (RFP) for the Tilaiya (Jharkhand) ultra mega power project will be issued by May 30, 2008; the RFQ has already been completed, said Dr Garg.

PFC is the nodal agency for UMPPs in the country. If the RFP goes through as scheduled, Tilaiya would be the fourth UMPP in the country to be awarded. The three already awarded are those at Sasan, Mundra and Krishnapatnam.

“As of now, May 30 is the timeline for issue of RFP, subject to certain formalities being completed,” said Dr Garg. Environment and forest clearances remain to be obtained, he said.

On the renewable energy front, PFC has extended a loan to West Bengal Green Energy Development Corporation Ltd to set up a 2 mega watt solar power plant at Asansol. This is expected to be commissioned by May end, he said.

PFC also recently entered into a memorandum of understanding with the Tamil Nadu Electricity Board for funding co-generation bagasse-based projects. There are 14 mills and a lot of bagasse is available, said Dr Garg. Collectively the generation would amount to 250 MW of power.