The Telegraph
Since 1st March, 1999
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Power units face project cap

New Delhi, Nov. 15: The government is considering a cap on the number of mega power projects to be awarded to an industrial house.

Many companies have petitioned Union power minister Sushil Kumar Shinde for such a limit after Anil Ambaniís Reliance Power bagged the Sasan project in Madhya Pradesh, while emerging the lowest bidder for the Krishnapatnam project in Andhra Pradesh.

Reliance Power is also in the race for the Tilaiya project in Jharkhand.

Officials said there were apprehensions within the government and industry over the capability of a single entity to manage multiple projects of considerable technological complexity. There are also fears of a company gaining monopoly by managing many such projects. The estimated investment in each project is Rs 16,000 crore.

Opponents to the proposal cite the case of the oil and gas sector where there are no caps. Therefore, there should be no such restrictions in power.

Industry sources said it was not right to discriminate against big operators vis-à-vis smaller ones on the grounds of their ability to handle many large projects.

They have proposed stricter pre-qualification criteria for a company bidding for more than one project.

Besides it would be unfair to change the rules midway, since bidding is over for four of the nine projects. The last bid was for Tilaiya that attracted 13 entities. Any change now will affect the confidence of investors, the sources said.

Officials of power companies said they would be in a position to comment after the government firmed up its views.

Of the nine projects, the government has awarded the Mundra project in Gujarat to Tata Power and Sasan to Reliance Power.

The Mundra project will run on imported coal, and the Tatas had placed the lowest bid of Rs 2.26 per unit; for Sasan, which is a pit-head based project, Reliance offered Rs 1.19 per unit. The Krishnapatnam project will run on imported coal, and the Reliance bid for it is Rs 2.33 per unit.

As the power ministry explores the options on bidding rights, the Power Finance Corporation, the nodal agency for the projects, is continuing its groundwork on the bid process for the other five projects.

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