Reliance Power has bagged the Tilaiya ultra mega power project (UMPP) in Jharkhand by offering to supply power at Rs 1.77 per unit — the lowest price quoted by the four companies in the fray.
The next best bid for the Rs 16,000-18,000-crore project came from government owned NTPC, which offered to supply power from the pithead coal project at Rs 2.39 per unit.
There were two other bidders — Jindal Steel and Power which offered to supply power at Rs 2.69 per unit and Sterlite Industries which bid the highest at Rs 2.97 per unit.
The fifth company shortlisted to bid, Lanco Infratech, partnership with Genting Power International, withdrew at the last minute, according to an official of the Power Finance Corporation (PFC), which is the nodal agency for the ultra mega power projects. Lanco said that bankers to its partner, Genting Power, withdrew support for the project at the last moment, forcing them to withdraw their bid.
This is the third UMPP won by the Anil Ambani group company, after Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh.
Eleven companies had originally qualified to bid for the Tilaiya UMPP but the global financial meltdown and the subsequent credit crunch saw many companies opt out of the bid. These included the likes of Tata Power and Larsen & Toubro.
Analysts described Reliance’s winning bid as “very aggressive,” citing the huge gap between the lowest bid (Rs 1.77 per unit) and the second best bid (NTPC’s Rs 2.39 per unit). The bid was however much higher than the Rs 1.19 per unit that the company bid for the comparable project at Sasan.
| TILAIYA: KEY FACTS |
| * Fourth ultra mega power project to go under the hammer |
| * Eleven bidders qualified, though only four put in final bid |
| * Pithead coal project like Sasan in Madhya Pradesh |
| * Winning bid of Rs 1.77 per unit is significantly higher than Sasan’s Rs 1.19 per unit as costs have gone up |
| * Reliance Power sees high margins from Tilaiya, no financing challenges |
“The tariff is much higher when compared to Sasan. We expect much better margins,” said Reliance Power’s chief executive, JP Chalasani.
Analysts were also concerned about the financing challenges that the company would face given the group exposure norms that it is likely to run into.
“We do not expect any financing challenges,” asserted Chalasani. “The Tilaiya project is due for commissioning in 2015, which gives the company enough time to manage the funding. Financial closure for the Sasan UMPP is expected next month, while that of Krishnapatnam is likely in the first quarter of the next financial year, he added.
Reliance Power, which went for an initial public offer in February 2008 and had plans to set up 13 power plants with a combined capacity of 28,200 Mw, does not have any operational plant currently. The projects expected to be commissioned are a 300 Mw captive power plant at Butibori near Nagpur in Maharashtra and the 600 Mw Rosa Power Plant at Shahjahanpur of Uttar Pradesh. These are likely to be commissioned only by 2010.
While there is no cap on the number of UMPPs that a company can bag, the performance guarantees required go up with each project. For instance, a performance guarantee of Rs 300 crore is required when a company bags its first UMPP. For the second project, the performance guarantee required goes up to Rs 450 crore, and Rs 600 crore for the third project, officials informed.
The Tilaiya project in Jharkhand, which will be funded seven parts by debt and three parts equity, is a part of the government’s showcase UMPP scheme under which over 50,000 Mw of power capacity is planned through 13 projects during the 12th Five-Year Plan (2012-2017).
Tilaiya is the fourth UMPP to go under the hammer. Reliance Power has bagged three, while Tata Power bagged the Mundra UMPP in Gujarat.
Coal for the project is proposed to be made available from Kirandhari B&C coal blocks of North Karanpura coalfields, which have estimated reserves of 972 million tonnes. The water source for the project is the Tilaiya reservoir.
The state government will make available the 3,355 acres of land required for the project. According to a PFC note on the project, the site has “minimum settlements and as such no major resettlement and rehabilitation issues are likely to be involved”.
