India cancels two power projects as all private bidders pull out

Underlining the lacunae in the government's policy for 'ultra-mega power projects' (UMPPs), the union power ministry has been virtually forced to scrap the bidding process for two UMPPs of 4,000 MW each proposed to be built in Odisha and Tamil Nadu after all private bidders walked out, leaving only the two state-run firms, National Thermal Power Corp and and National Hydropower Corp, in the only biddrs.

The ministry under Piyush Goyal is now seeking to renew the bidding terms for the projects that would entail a combined investment of Rs50,000 crore.

''Unfortunately, we did not get enough bids. We have had to scrap the process, which was initiated before this (NDA) government came in. I thought it was not prudent to keep extending the date without any solution," power and coal minister Goyal said.

The ministry is likely to appoint an expert panel to examine whether the bidding documents were fair to all stakeholders. Bidders have complained of the bid norms not having fair methodology.

Adani Power, Jindal Power, Sterlite and GMR had all walked out of the project in October last year, telling PFC Consulting, the agency advising the government on the projects, that the terms were too stringent for economic viability.

These companies along with NTPC had paid money to obtain the RFP (request for proposal) required for submitting price bids, but then decided to cut their losses rather than proceed under clearly unviable terms.

"The two bids have been scrapped for different reasons. One of the projects received a single tender and a nation does not benefit with a single bid. The other is due to the problem of coal companies and electricity companies being two different entities," Goyal said.

"I will consult experts, as bankers have also flagged the issue that they were unable to provide funds to finance these projects under the current dispensation," he added.

For the Tamil Nadu project, the private companies in the fray were Adani Power, CLP India, Jindal Steel & power, JSW Energy, Sterlite Energy and Tata Power. Of these, four bought the RfP.

The Odisha project saw nine initial expressions of interest, including from Adani Power, CLP India, GMR Energy, Jindal Steel and Power, JSW Energy and Sterlite Energy. But they all pulled out.