Review of Indian UMPP Policy and Supporting Framework: Lessons for Developing Countries pp. 71-94
Authors: (Mohit Goyal, Jayant Kaim, Indian Institute of Management (IIM), Ahmedabad, India)
Abstract: Faced with a daunting task of bridging the peak deficit of 12% in power generation, GoI (Government of India) recognized the fact that economies of scale in power plants can help it achieve cheaper power generation and faster capacity addition through development of large size power projects using latest supercritical thermal technologies and that it needs to come out with policies and guidelines supporting development of economies of scale. Hence GoI formulated the UMPP (Ultra Mega Power Plants) Policy 2006 through various rounds of discussions with financing agencies, nodal agencies, regulators and developers. In the initial part, this paper presents an analysis of the UMPP Policy and the supporting competitive bidding framework, including analysis of responsibility of different stakeholders, different stages in the bidding process and appropriation of risks associated with the project amongst stakeholders. In the latter half of the paper, authors focus on the key challenges faced during the competitive bidding process. The paper highlights the key learnings from them for policy makers around the world, especially the developing countries which are looking at adopting the competitive bidding framework for infrastructure development.