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Power Finance Corporation (PFC), the nodal agency for UMPPs, had received nine bids for the 4,000-Mw project by Monday, the last date for submission of request for qualification (RFQ). Apart from the bid by NHPC, which has teamed up with Bhel and SCCL, the other bids were placed by power generator NTPC Ltd, Tata Power, Adani Power, JSW Energy, Jindal Power Ltd (JPL), Vedanta Group company Sterlite Infraventures, foreign investor China Light & Power (CLP) and engineering giant L&T.
The nine bids received this time are in stark contrast to the 22 bids submitted by companies for the same project the RFQ for which was originally issued in June 2010. The 22 firms that expressed interest then included Jindal Power, CESC, Sterlite Energy, JSW Energy, Tata Power, NTPC, Torrent, L&T, Adani Power, Lanco, GMR and GVK Power. However, the bid validity period (of three months) had to be extended six times owing to the delay in framing the new standard bidding documents (SBDs) before the new RFQs were issued in September this year.
PFC said in a statement that the response from “renowned and reputed applicants in the prevailing investment scenario in the infrastructure sector reflects the high degree of comfort and confidence the investors perceive owing to the state of preparedness of the project”. Land for the project is expected to be in possession shortly, water is available from Hirakud reservoir and coal supply is assured through allocated coal blocks ,thus eliminating fuel risk, it added.
PFC had floated the RFQ for the project on September 25. The last date for submission of RFQs was extended once last month. “Interestingly, NHPC has formed an internal joint venture with Bhel and Singareni Colleries Company for the UMPP. But the bid has been placed by NHPC alone,” said a senior PFC executive close to the development.
A senior Bhel executive confirmed the equipment manufacturer has submitted its bid as part of a joint venture (JV) with NHPC and SCCL. “The equity participation in the JV has not been decided yet. We needed a partner as we lack expertise in power plant operation. Funds for the UMPP would not be difficult as long debt is tied-up. As for equity, we have cash reserves of close to Rs 5,000 crore at present," he said. A senior executive from NHPC, too, confirmed having placed the bid.
BHEL had reported a 64 per cent dip in profit in the second quarter, its fifth straight quarterly dip, at Rs 455 crore as it suffered further erosion in new orders and battled unpaid dues of over Rs 40,000 crore from vendors. NHPC’s profit, too, had declined 10 per cent to Rs 707 crore during the quarter as delays in project execution took a toll on margins.
Market experts say it makes business sense for Bhel to bid for UMPPs. “At Rs 1,03,000 crore, the company’s order book position is strong. The slowdown in orders was owing to the general slowdown in economy and the capital goods sector. Despite the constraints, it has delivered good performance in the second quarter. By bidding for UMPPs, the company is clearly trying to beat the slowdown in economy by diversifying,” said Kishor P Ostwal, chairman and managing director of Mumbai-based CNI Research. He added that Bhel would not find raising debt for the project difficult, thanks to its strong fundamentals.
The power ministry had fast-tracked the bidding process for two UMPPs - Odisha and Tamil Nadu - earlier this year. The last date for RFQ submission for the Tamil Nadu project is Thursday.
