Bidders pull out of UMPP auctions

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Private players are pulling out of the auctions for two upcoming ultra mega power projects (UMPPs) of 4,000 mw in Odisha and Tamil Nadu worth Rs 25,000 crore each, leaving public sector company NTPC alone in the race.

Industry sources said four pre-qualified companies had written to Power Finance Corporation (PFC) saying they were withdrawing because of uncertainty over the bid document.

Of the nine selected bidders for the Odisha UMPP and eight for Tamil Nadu, only four - Adani Power, GMR, Sterlite and Jindal Power - bought  request for proposal documents. But even they have decided not to proceed further.

PFCCL, the consultancy arm of PFC executing the bidding process, did not respond to questions. Officials close to the development said any further statement would be issued by the government after Piyush Goyal, minister of state for coal, power and renewable energy, was informed about the issue.

In prior communications to the power ministry, the Association of Power Producers (APP), of which the four private companies are members, raised concerns over the design-build-finance-operate-transfer model for the UMPPs and warned investments might not be forthcoming.

"We would highly appreciate it if you could consider coming out with a framework that serves the development aspect more predictably and facilitating a comprehensive review of Case I and Case 2 DBFOT documents. Until then, it would be appropriate not to proceed with competitive bidding for the UMPPs," said a letter by the APP addressed to Goyal.

The letter said if their concerns were not resolved satisfactorily, companies would not be in a position to submit viable and competitive bids.

"The DBFOT does not apportion risk equitably. All losses go to the power generator and gains to the procurer, leaving the power producer as a contractor," said an APP functionary.

Of the 16 UMPPs that the United Progressive Alliance government planned to set up, four have been awarded. Three of these are operated by Reliance Power in Sasan, Tilaiya and Krishnapatnam and one by Tata Power in Mundra.

These projects were awarded after competitive tariff-based bidding and are executed by special purpose vehicles.