Companies to pay higher guarantee on new UMPP

Having already bagged two ultra mega power projects (UMPPs), Anil Ambani Group will have to furnish financial guarantee that is 50 per cent more than the previous amount to become eligible to bid for more such projects.

The government has not put any cap on the number of UMPPs to be awarded to a company, but has imposed stringent financial conditions to bid for additional projects.

“No cap has been put, only change that has been brought is that for every additional UMPP the financial guarantee requirement will be 50 per cent higher than the previous one,” said Satnam Singh, CMD of Power Finance Corporation.

The company bidding for a UMPP has to meet all requirements as outlined by the government and submit a bank guarantee of Rs 300 crore for financial performance.

With the new clause in place, the successful company bidding for the second UMPP will have to produce bank guarantee of Rs 450 crore instead of Rs 300 crore.

The government has already allotted three UMPPs, out of which one has been bagged by Tata Power (Mundra in Gujarat) and two by Anil Ambani group firm Reliance Power (Krishnapatnam in Andhra Pradesh and Sasan in Madhya Pradesh).

However, the clause does not apply to the two already allotted UMPPs to Reliance Power, as it will be applicable to future projects only.

The government has invited bids for the fourth UMPP at Tilaiya in Jharkhand.