Home News Technical Articles Interviews Cover Story Orders & Contracts
Power Generation
Green Energy

UMPP – Ultra mega policy pressure

Em News Bureau ,  Friday, April 19, 2013, 10:54 Hrs  [IST]

India had something to cheer about recently when the country’s first ultra mega power project was fully commissioned. The milestone was crossed when Tata Power announced full commissioning of its massive 5x800-mw Mundra project in Gujarat.

When announced in late 2006, the UMPP policy was construed to be the government’s most ambitious and radical step in the power generation segment. It must be accepted that through the UMPP venture, the government demonstrated a very sincere attempt in changing the paradigms in power generation. For one, the UMPP series was designed to deploy large-capacity coal-fired units (660 mw or 800 mw) using supercritical technology. A power plant using units of such capacity would obviously entail lower per-mw capital costs compared with the standard 250-mw or 500-mw variants. Supercritical technology, which can generate more electricity per unit coal consumed, is good news for India especially considering that coal-fired power plants will continue to be the backbone of the country’s power generation infrastructure, regardless of the incipient clean energy consciousness.

The UMPP series also brought into force the policy of awarding projects on the basis of tariff-based competitive bidding (Case 2). In this, prospective developers, whether private or public sector, had to bid on equal footing and the final selection was based purely on the tariff quoted. The “Case 2” modality ensured that the government fulfilled its role as a facilitator by assisting in pre-project formalities like land acquisition, environmental clearance, etc.

Now, after over six years in the regime, opinion is divided on whether success has eluded the UMPP experiment. So far, only four UMPPs have been awarded against ten envisaged. Of these, three have gone to the same developer, which quite militates against the idea of “broad participation.” While the first UMPP received cheerful response from bidders, investor interest rapidly waned in subsequent projects. The government has faltered on its pre-project commitments and several UMPP projects are unable to mature even to the tendering stage.

The Mundra UMPP is complete and the Sasan UMPP (by Reliance Power) is racing towards commissioning. However, both the projects are however facing serious challenges in coal supplies. Indonesia, from where Tata Power would source coal for the Sasan project, has made changes to sovereign laws making coal imports much costlier. The tariffs quoted in the PPA are grossly unviable. The government’s stand on whether this cost escalation can “pass through” to the consumer is still unclear. The Mundra UMPP–a marvel of engineering and enterprise–is still many steps away from becoming a productive asset.

Once again, it is weak political that stands in the way of progress. While the private sector can be generally relied upon to bring in technology and managerial expertise, it is the government that needs to bolster its policy-making machinery. Indian history is replete with instances where weak, dithering and dawdling political will has seriously stifled enterprise. Such instances just keep growing.
Post Your RemarkYOUR REMARK
* Email :    
  Website :  



© 2017 Electrical Monitor. All Rights Reserved.