Financial crisis hits UP power plan

Bid date for Allahabad project postponed on fears of higher tariff quotes.

The ongoing global financial crisis has affected the prospects of a power plant to be set up in Allahabad district of Uttar Pradesh with the government extending the date of the submission of financial bids to January 5, 2009.

Earlier, the bid date was extended from November 30 to December 15. Nine companies — NTPC, Indiabulls, JP Power Ventures, Lanco Kondapalli, GVK, L&T, Adani Power, Reliance and Isolux — are in the fray.

“We have extended the bid date to January 5, 2009,” UP Power Corporation Ltd (UPPCL) Managing Director Avnish Kumar Awasthi told Business Standard.

UPPCL fears that in the prevailing economic situation, the bidders will quote a higher price for supplying electricity and so the corporation is buying time, say official sources. The government wants to set up a 1,980-Mw thermal power plant at Bara based on super-critical technology.

Meanwhile, the fate of the proposed 1,320-Mw plant at Karchhna in Allahabad is still undecided due to the steeper tariff bid by the JP Group than the earlier two bids of Lanco and Reliance which were rejected for being on the higher side.

The JP Group had last month emerged the lowest bidder for Karchhna by quoting Rs 2.97 per unit. Its bid was 37 paise higher than the rejected bids. Both the proposed plants have already been delayed by one year.

The UP Energy Task Force is in a dilemma whether to seek fresh bids for Karchhna since JP has declined to revise its bid downwards citing a difficult credit market.

The government is awaiting the outcome of bidding for the Tilaiya Ultra Mega Power Project (UMPP) in Jharkhand by the end of this month since it believes the bids for this 4,000-Mw project will be higher.

“This might allow the Energy Task Force to justify the ‘higher’ bid by JP for Karchhna and the subsequent financial bid for Bara,” said a source.

Earlier, All India Power Engineers Federation General Secretary Shailendra Dubey had claimed that the higher bid by the JP Group would cost the government Rs 7,400 crore in 25 years. The cost of the project itself was estimated at Rs 6,700 crore.

“The government should hand over the projects to the Vidyut Utpadan Nigam so that the plants are completed on time and consumers get cheaper electricity,” he added.