LoI for Tilaiya project likely to be issued this week

Anil Ambani-led Reliance Power, which has emerged as the front-runner for the 4,000 Mw Ultra Mega Power Project (UMPP) at Tilaiya in Jharkhand, is likely to be issued the Letter of Intent (LoI) this week.

The LoI is a document outlining an agreement between two or more parties before the agreement is finalised.

"In all probability the LoI would be issued to the company (Reliance Power) this week," a source close to the development said.

Reliance Power was the L1 (lowest) bidder for the Tilaiya UMPP in Jharkhand, for which the financial bids were opened on January 28, last month.

This is the third UMPP to be bagged by Reliance Power; it has already been awarded the Sasan (Madhya Pradesh) and Krishnapatnam (Andhra Pradesh) projects.

The government may revisit the issue of a cap on allotting such projects to a particular developer. The decision of putting a cap on the allotment of UMPPs was rejected by the Empowered Group of Ministers (EGoM) in November 2007 in order to keep up competition.

Now there are stringent financial guarantees for every project to be given by companies at the time of submitting bids.

A company that has been awarded a project and is bidding for another has to provide a financial guarantee -- additional 50 per cent of the amount guaranteed for the previous project.

The government is expected to add 50,000 Mw by way of these UMPPs, which are expected to come up in the XIIth Five-Year Plan (2012-17).