UMPPs to be protected from uncertainties in coal imports

NEW DELHI: The power ministry has proposed to shield electricity producers from uncertainties in coal imports, a problem that had affected earlier Ultra Mega Power Projects that were to use imported fuel.

The power ministry on Tuesday issued draft guidelines for UMPPs that use imported coal. It contains elaborate provisions for unforeseen events related to imports.

The draft documents provided that imposition of sanctions by foreign countries on India with regard to supplies of coal, resulting in the cessation of coal supply to developers of UMPPs and the consequent inability of the company to locate coal from any other source, shall be construed as an indirect non-natural force majeure event.

Lack of such provisions for earlier UMPPs had led to legal tangles. Of the four UMPPs bid out so far, two were proposed to be based on imported coal. While Tata Power awaits compensatory tariff for its Mundra UMPP in Gujarat, Reliance Power stalled work on its Krishnapatnam UMPP.

Association of Power Producers Director-General Ashok Khurana said: "We have not been able to review the documents in depth. Prima facie the proposed documents appear equitable and balanced. This would help to generate investors' interest."