Top firms bid for mega power units

Tata, R-ADAG, Sterlite, NTPC among 16 in race.

The government's ambitious plans to add 36,000 MW of power capacity through nine ultra mega power projects got off to a smooth start today with the first two of these projects "" Sasan in Madhya Pradesh and Mundra in Gujarat "" getting better-than-expected 16 bids, though most foreign companies stayed away.

There were 10 bids for the Sasan ultra mega power project, which will be based on pithead coal, and six bids for the Mundra project, based on imported coal.

The ultra mega power projects are aimed at plugging the huge gap that exists between the demand and supply of power in the country.

Tata Power, L&T, Reliance Energy, Essar Power, and Sterlite Industries have bid for both the projects, each of which involve an investment of about Rs 20,000 crore.

The other bidders for the Sasan project are NTPC, Torrent Power, Jindal Steel & Power, Jaiprakash Associates, and Lanco, the last in partnership with UK's Globeleq, the only overseas company to figure in the bids. The sixth bidder for the Mundra project is Adani Enterprises.

Though there were a dozen-odd qualified bidders for both the projects, foreign majors like AES, China's CLP Power, and Sumitomo have not bid. However, given the scepticism that surrounded these projects, the response is being seen as good in industry circles and the government.

"I am extremely happy with the response. It is better than expected," said an elated Power Secretary R V Shahi, who was anticipating 6-7 bids for Sasan and 4-5 bid for Mundra.

On the staying away of foreign companies, he said he expected some tie-ups to happen between those companies and the existing bidders.

He also expected the foreign companies to be active in the next round of bids, once they had seen a smooth closure of the current round. "I am 100 per cent sure of their participation in the next few projects," he said.

His view was supported by industry executives, who opined that the foreign companies were waiting for the initial "proof-of-concept" bids to be through, before they stepped in.

"These companies have adopted a wait-and-watch policy for now. We are likely to see a better response in the next round," said A Vishwanath, KPMG's senior vice-president, who has been advising prospective investors in the sector.

There also seems to be keener interest in the next project "" at Krishnapatnam in Andhra Pradesh "" a state where state utilities are seen to be financially healthier than their counterparts in the rest of the country. Bids for this project are likely to be invited in March.

The winning bidders for Sasan and Mundra are likely to be known on December 11, when the financial bids are slated to be opened. The developer that bids to supply power at the lowest tariff will be awarded the project. Earlier, Shahi had said he expected the tariff of the winning bid to be "substantially below" Rs 2 per unit.

The bids will be vetted by specially set-up apex committees, comprising the chairmen of Punjab National Bank, Power Finance Corporation, and Central Electricity Authority.

In addition, special secretaries of Madhya Pradesh, Uttar Pradesh, and Haryana would be a part of the Sasan committee, while special secretaries of Gujarat, Maharashtra and Punjab would be on the Mundra committee.

The projects are slated to be awarded to the successful bidder by December 31.