NEW DELHI: The Reserve Bank of India has allowed loans to new ultra mega power projects (UMPPs) to be regarded as secured debt even though the site and the plant will be owned by distribution utilities, not the winning bidder, official sources said, setting the stage for a wave of new giant power stations.
Power Minister Jyotiraditya Scindia had approached RBI on the issue as lenders said debts to the proposed projects would be risky in the absence of ownership by the borrower. The new round of UMPPs, followings the previous projects such as the Mundra plant of the Tata group and Reliance Power's Sasan unit may also allow tariff revision, bar non-core sector firms from bidding and restrict offloading of equity by the company that is awarded the project.
As per the proposed bidding norms, ultra mega power projects and such other location specific plants will be owned by power distribution utilities and the bidders will merely be contractors for constructing the project and operating them for 30 years.
However, the proposed framework provides that the companies and the distribution utilities can jointly mortgage the site and the generation station with the banks during the tenure of the loan, the government official said. The power projects will be transferred to the distribution utilities at the end of the concession period for a cost, similar to the case of other infrastructure projects in road and port sectors.
The government has also sought to make the norms stringent by barring all non-core sector companies from participating in the bidding. The qualified company or consortium cannot offload more than 51% equity in the project till commissioning of the project against the earlier mandate of 26%.
As per the proposal, bidders with required technical expertise will be asked to submit a fixed charge for the initial year unlike the earlier process of submitting levellised tariff for 25 years. The actual tariff payable to the concessionaire will be revised annually based on a pre-determined index. Fuel cost of the power projects will be passed on to the consumers.
The norms, known as standard bidding documents, will be taken to the cabinet committee on economic affairs for approval and a note has been circulated for consultation. Once approved, the norms will pave way for auction of two ultra mega power projects in Bedhabahal and Surguja in Chhattisgarh that have been put on hold.
The government has so far awarded three ultra mega power projects to Reliance PowerBSE -0.13 % and one to Tata Power. Sites for 10 more such projects have been identified in Tamil Nadu, Karnataka,Orissa, Andhra Pradesh, Gujarat, Bihar, Jharkhand and Maharashtra.