Limits likely for power project bidders

The power ministry is likely to come up with guidelines on whether companies that have already secured an ultra-mega power project (UMPP) can bid for those yet to be awarded.

The guidelines, expected to be framed shortly, will define the upper limit for the number of projects that a developer can secure.

Speaking to Business Standard, V K Garg, chairman and managing director of Power Finance Corporation (PFC), said, "It is a question we are looking into and we will soon come out with guidelines on what is an acceptable level of risk." PFC is the nodal agency for all the eight UMPPs.

Garg said the guidelines might be extended to other big power projects later. They assume significance in view of the increasing private participation in the power sector, with as many as 14 transmission projects lined up for investment. States are also considering privatising distribution circles.

The current guidelines for ultra-mega power projects have a minimum criterion for the number of projects a developer should have implemented before bidding, but they do not define an upper limit. High-ups in the government have expressed concern over the possibility of a developer taking on too many projects and not being able to deliver on time and without default.

Sources close to the development said financial institutions too had expressed such doubt at closed-door meetings.

The issue has come up in the context of the winners of the first two ultra-mega power projects, Tata Power and Lanco, announcing their intention to bid for the Krishnapatnam coastal project in Andhra Pradesh, expected to be awarded by March-end.