QUOTE “We live in a post war world. Today shooting wars are exception. But are we entering an era of Resource Wars?. And energy is the principal resource over which global competition is expected” (Shashi Tharoor, Member of Parliament) (Shashi Tharoor, Member of Parliament)

PUBLIC PRIVATE PARTNERSHIP IN POWER SECTOR A FOCUS ON ULTRA MEGA POWER PROJECTS Dr Rajesh Gangakhedkar

Sector

Fuel

Source: Report of the Working Group on Power Sector for Twelfth Plan

Source: Faster, Sustainable and More Inclusive Growth- An Approach to the Twelfth Five year Plan- Report of Planning Commission. Projected Commercial Energy Requirement by the end of twelfth five year plan ( ) in million tons of oil equivalent.

Energy Statistics (CSO)

Energy Statistics 2012(CSO)

PPP - RATIONALE Cooperative relationship between government and private sector. Each partner in this synergy has a role to play. Considered as a solution for the problem of infrastructure bottlenecks. The model is being adopted for both physical and economic infrastructure.

ULTRA MEGA POWER PROJECTS 4000MW Capacity Economies of scale and higher efficiencies All of them are coal based To play a significant role in capacity additions Two Stage bidding process A)RfQ B)RfP Role of PFC (Special Purpose Vehicle), ministry of power and the states

SOME UMPPs Sasan-Reliance : Pit head coal project. Five Units of 660 MW each. Seven states. Sasan-Reliance : Pit head coal project. Five Units of 660 MW each. Seven states. Mundra-Tata : Coastal Project. Five Units of 800 MW each. Five States. Mundra-Tata : Coastal Project. Five Units of 800 MW each. Five States. Krishnapatnam-Reliance Krishnapatnam-Reliance Other UMPPs : Tilaiya, Cheyyur, Sundergarh, Tadri Other UMPPs : Tilaiya, Cheyyur, Sundergarh, Tadri

COST EFFECTIVENESS? Super Critical Technology Super Critical Technology Sub CriticalSuper Critical Plant Efficiency (%) 3437 Emissions (gms/Kwh)

COST EFFECTIVENESS () COST EFFECTIVENESS (contd.) Competitive bidding Competitive bidding (i) Competition would act as reducer of prices Payment Security Mechanism Payment Security Mechanism (i) Provision of Site, fuel linkage, water and other clearances (ii) Third party sales Ownership of resources Ownership of resources Cheaper power equipment Cheaper power equipment

POSITIVE FACTORS Positive attitude of international lending agencies. Positive attitude of international lending agencies. Provisions of Electricity Act, Tariff Policy Provisions of Electricity Act, Tariff Policy Role of PFC Role of PFC A Well crafted Power Purchase Agreement (PPA) A Well crafted Power Purchase Agreement (PPA)

ISSUES AND CONCERNS Escalation factor Escalation factor Supply constraints Supply constraints Finance Finance Distribution being the weakest link Distribution being the weakest link Land acquisition issues (Sasan, Krishnapatnam, Tilaiya) Land acquisition issues (Sasan, Krishnapatnam, Tilaiya) Go/No Go issue Go/No Go issue

CONCLUSION The UMPP is a laudable measure. There are high expectations in terms of capacity additions. It has to be taken to logical conclusion.

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