Till now, the government has awarded four UMPPs (two each on domestic and imported coal). Reliance Power [Reliance ADAG Group Company] has won three of them (Sasan, Krishnapatnam, and Tilaiya) and Tata Power has been awarded one (Mundra). Following the absence of significant action in the past 12 months on bidding, Power Finance Corporation (PFC), which is the nodal agency for UMPPs, has invited RFQs for a fifth UMPP in Sarguja. For FY11, there are three more UMPP bids (Orissa, Tamil Nadu, and a second UMPP in Andhra Pradesh) in the pipeline.
Tata Power’s Mundra UMPP is ahead of the pack in execution. After initial problems that were primarily related to land acquisition, work is progressing at Sasan and on its associated mine development. The Tilaiya and Krishnapatnam projects are at early stages, compared with the Sasan and Mundra UMPPs.
Four new UMPPs could be awarded in FY11/12. With Reliance Power being ineligible, the bidding could be less aggressive. We think potential bidders could include NTPC, Adani Power, Lanco, and some new players in the sector. We also believe that L&T could be another beneficiary as it plans to grow its generation capacity aggressively (5,000MW capacity by 2015).