DEVELOPMENT OF ULTRA MEGA POWER PROJECTS Shyam Wadhera Director (Projects) Power Finance Corporation Ltd. 11 th May, 2006

THE CONCEPT: DEVELOPMENT OF LARGE GENERATION PROJECTS THROUGH COMPETITIVE BIDDING Setting up of large projects of 4000 MW at a single location: ensuring economies of scale Utilisation of super critical technology: ensuring higher efficiency and lower CO 2 emissions Award of projects to developer through tariff based competitive bidding : ensuring cheaper power

THE APPROACH Guidelines for determination of tariff through bidding process were issued on 19 th January, 2005 under Section 63 of the Electricity Act, These provide for procurement of power by Distribution Licensees through competitive bidding Separate SPVs for each project to undertake project development activities including bid process management on behalf of procurers

TECHNICAL FEATURES Utilisation of higher efficiency super critical technology with unit size of 800 MW Station capacity of about 4000 MW (5x800 MW) Flexibility re: unit size to be permitted, subject to meeting thermal efficiency requirements

SITE SELECTION Site selection by CEA taking into consideration availability of fuel, land and water etc. 5 suitable locations identified based on preliminary scrutiny by CEA of a number of potential sites available in the country : Two pithead locations based on domestic coal. Sasan in MP Akaltara in Chhattisgarh Three coastal locations based on imported coal. Mundra in Gujarat Girye in Maharashtra Tadri in Karnataka One additional pithead site in Orissa and one coastal site in Andhra Pradesh are also under consideration

LEARNING FROM PAST EXPERIENCE IPP experience in the past highlights critical importance of availability of Reliable fuel supply Environmental clearances Power purchase agreement with payment security for achieving financial closure Shell Companies to obtain statutory clearances and to tie-up inputs

THE SHELL COMPANY CONCEPT PFC identified as the nodal agency Shell Companies set up as wholly owned subsidiaries of PFC. Each Company to work independently to reach a stage where major tie-ups, statutory clearances and linkages are in place. Selection of developer through tariff based ICB. Shell companies will then be transferred to the successful bidders for execution of projects.

ROLE OF MINISTRY OF POWER Ministry of Power to be facilitator Co-ordination with concerned Ministries/ Agencies and State Govts. for ensuring: Coal block allotment/ coal linkage Environment/ forest clearances Facilitate acquisition of land Required support from State Govt. & its agencies on various issues Financial closure by Financial Institutions To facilitate PPA and proper payment security mechanism with State Govt./ State utilities Monitoring the progress of shell companies w.r.t predetermined timelines

ROLE OF SHELL COMPANIES Shell Companies to take action for: Appointment of Consultants to undertake preparation of Project Report Initiate land acquisition proceedings Obtain coal linkages/ allocation of captive coal blocks for pit- head projects. Allocation of water by the State Govt. for pit-head locations Approval for use of seawater from Maritime Board/ other Govt. Agencies for coastal locations Appointment of Consultants for International Competitive Bidding (ICB), document preparation & evaluation. Contd..

ROLE OF SHELL COMPANIES …. Contd. Obtain various approvals and statutory clearances. Tie up for off-take/ sale of power as per provisions of Section 63 of EA Initiate action for development of the power evacuation system and undertake system studies considering the addition of capacity from these projects

BIDDING PROCESS For the purpose of selection of a developer, a two stage selection process has been adopted. The first stage of bidding will involve Request For Qualification (RFQ) containing qualifying criteria for selection of bidders to participate in the second stage. The second stage of bidding will invite Request For Proposals (RFP) from the qualified bidders which will further be evaluated by the SPVs with help of appointed consultants. The RfQ and RfP documents will conform to Competitive Bidding Guidelines of the Govt. of India

TIME SCHEDULE FOR FIRST TWO PROJECTS ActivityDate Notice for EoI for Sasan/ Mundra / Submission of EoI for Sasan/ Mundra28-Feb-2006 Issue of RFQ Documents for Sasan/ Mundra 31-Mar-2006 Submission of Bids (RFQ)01-June-2006 Issue of RFP Documents15-June-2006 Submission of Bids (RFP)15-Nov-2006 Selection of Developer/ Transfer of SPV31-Dec-2006

ACTIONS TAKEN BY SHELL COMPANIES Issuance of EOI: Sasan (MP) 31-Jan-2006 Mundra (Gujarat) 01-Feb-2006 Girye (Maharashtra) 28-Feb-2006 Tadri (Karnataka) 10-Mar-2006 Bidders’ Conference: Sasan & Mundra at New Delhi21-Feb-2006 Girye at Mumbai17-Apr-2006 Site visit for Bidders Sasan and Mundra sites 22 nd to 24 th Feb 2006 The Conference attended by about 35 companies including Overseas Companies and representative of FIs/ Banks. Contd..

ACTIONS TAKEN BY SHELL COMPANIES…. contd Technical Consultants appointed for preparation of Project Reports for 5 projects Studies started by the consultants for Sasan and Mundra Projects. Consultant appointed for preparation of bidding documents and to advise regarding bid process management for the tariff based competitive bidding for Sasan and Mundra projects

SCOPE OF TECHNICAL CONSULTANCY Scope of Work: Topographical Survey Geo Technical Study Area drainage Study EIA Study Socio Economic survey Hydrographic Study (for coastal projects) Completion Schedule: for Sasan & Mundra

Scope of Work:  To prepare documents for Request for Qualification  To assist & advise in carrying out detailed evaluation of RFQ  To prepare documents for Request for Proposal (RFP)  To participate in all Bidders Conference  To Prepare bid evaluation Financial models to carry out analysis of Bid including sensitivity analysis  To assist & advise in detailed evaluation of RFP received  To analyse project risks and advise on risk allocation matrix  To assist & advise in selection of successful developers and participate in negotiations. SCOPE OF BIDDING CONSULTANCY

GOVERNMENT SUPPORT : Support of State Govt: Periodic meetings by Ministry of Power with Senior State Govt. Officials to obtain their support on issues relating to land, water, environment issues Support of Financial Institutions: Meeting taken by Secretary (Power) with Heads of Financial Institutions on Support of Industry: Meeting taken by Hon’ble Finance Minister with Industry Leaders on

GOVERNMENT SUPPORT : …. Contd. Contd.. Support of Govt. of India: Development of Ultra Mega Power Projects discussed in Meeting of Energy Co-ordination Committee Chaired by Hon’ble Prime Minister on Purchase of Power: Meeting taken by Secretary (Power) with Principal Secretaries and Utility Chiefs of purchasing states on Transparent Bidding Process: Bidders’ Conference for Sasan and Mundra projects held at New Delhi on  Broad Qualifying Requirements discussed and consensus evolved

POWER OFF-TAKE S.No.State\ Project ->Sasan (MP)Mundra(Gujarat)Girye(Mah.)Karnataka 1Delhi Uttar Pradesh Uttaranchal Punjab Rajasthan Haryana Madhya Pradesh Chattisgarh Guajarat Maharashtra Karnataka Tamil Nadu Kerala Andhara Pradesh---- TOTAL4000

PAYMENT SECURITY MECHANISM As condition in PPA Letter of credit (LC) by distribution utilities Escrow on the receivables of distribution utilities Direct supply to HT consumers in the unlikely event of default as per provisions of the Electricity Act 2003 to be accepted upfront

Meeting with Secretary (Coal) on regarding allocation of captive coal blocks Meeting with Secretary (Environment) on to emphasise fast track environmental clearance for the Ultra Mega Power Projects Presentation given to Dy. Chairman, Planning Commission on Meeting with Bidders on at New Delhi for clarification of RfQ issues Presentation to Expert Committee (Thermal) of MoEF on A presentation to Chairman and Members, CERC on INVOLVEMENT OF OTHER STAKEHOLDERS Contd..

…..and the Process Continues THANK YOU