Tilaiya bids to be opened today

The financial bids for the 4,000 Mw Tilaiya Ultra Mega Power Project in Jharkhand will be opened on Wednesday, according to sources.

Five power companies are in the race for the Rs 16,000-Rs 18,000 crore (Rs 160-Rs 180 billion) project -- Reliance Power, Lanco Infratech, NTPC Ltd, Jindal Steel and Power and Sterlite Industries.

The Tilaiya project is a part of the government's showcase UMPP scheme under which a power generation capacity of around 50,000 Mw is planned to be created through 13 of such mega projects, which will come up mostly in the Twelfth Plan period.

The award of the projects is decided on the basis of tariff-based competitive bidding. The company which bids to supply power at the lowest cost gets the project.

Tilaiya will be the fourth UMPP to come up in the country under a public-private partnership through tariff-based competitive bidding.

Reliance Power has bagged two of these UMPPs -- at Sasan in Madhya Pradesh and Krishnapatnam in Andhra Pradesh. Tata Power has bagged the Mundra UMPP in Gujarat.

The Tilaiya bids were initially expected to be opened by the middle of this month, but were delayed till January 28 due to unavailability of some technical information.

The technical bids for the project, in which the bidder mentions his technical capabilities for implementing such project, were opened on December 29 last year.

Four companies, including India's largest private sector electricity generator Tata Power and infrastructure major Larsen & Toubro, chose not to bid for the pithead coal project despite being qualified to bid.

The bids for the Tilaiya project come at a time when the global financial crisis is making it difficult for companies to get funding for large projects.

The credit crunch has also driven up interest rates to 14-15 per cent from around 11-12 per cent a year ago.

The government is, however, planning to ease the lending norms for banks and financial institutions so that they can provide funds for the UMPPs.

For the Tilaiya project, experts estimate companies to bid between Rs 1.19 and Rs 2 per unit of power sold.

They also estimate the financial bids to be higher than that offered by Reliance Power for the Sasan UMPP (Rs 1.19 per unit) due to higher interest rates and costs of raw material.

Both Sasan and Tilaiya are pithead projects, where the power plant is located next to a coal mine.