POWER October 2016 - 38

PROJECT DEVELOPMENT
Sasan's Shadow: An Ultra Mega
Power Project's Dark Side
Courtesy: Reliance Infrastructure
For all its record-breaking achievements for speed, innovation, and efficiency,
the 3,960-MW Sasan Ultra Mega Power Project should have been a
POWER Top Plant. But the unique project has been plagued by serious
setbacks-including loss of life-that show how perilous the plant construction
journey can be.
Sonal Patel
A
decade ago, India was suffering a
power crisis so dire that only 56%
of households in the country with a
population of 1.1 billion had connections
to the grid. (Today, it's 81%; see this issue's
" THE BIG PICTURE: Still in the Dark "
in the Global Monitor department.) Where
electricity was available, power cuts were
routine, and Indian industry, so used to failings
of the national grid, was forced to build
its own " captive " generating plants. In 2005,
gripped by the prospect of a widening chasm
between demand and supply (at the time,
demand exceeded supply by 12.1%), India's
central government set ambitious targets to
add 100 GW of new generating capacity over
the next 10 years to fuel its surging economy.
One of its most formidable ventures to
boost this virtual doubling of generating capacity
was the introduction of ultra mega power
projects (UMPPs). Backed by the Ministry
of Power and the Central Electricity Authority,
the program consisted of two stages. First, it
tasked the state-owned Power Finance Corp.
38
(PFC) with setting up subsidiaries known as
" special purpose vehicles " (SPVs) to procure
land, water, and environmental clearances as
well as power purchase agreements and to
allocate coal blocks to fuel a dozen planned
4-GW UMPPs scattered around the country.
Secondly, the government invited private
companies to bid competitively to acquire an
SPV based on the lowest " levelized " tariff to
be charged for electricity.
In February 2006, the PFC established Sasan
Power Ltd. to develop, own, and maintain
a UMPP in Singrauli, a district in the northeastern
state of Madhya Pradesh. Historically,
the region had been covered in forests so dense
and wild that it was used as an open-air prison
by the maharajas of the neighboring Rewa region.
Since construction of a large dam in the
1950s that formed a sizable artificial lake, the
Govind Ballabh Pant Sagar Lake Reservoir,
and the discovery of rich coal deposits spread
over 2,200 square kilometers of nearby land,
Singrauli has been transformed into an energy
hub. Owing to its proximity to an abundance
www.powermag.com
of coal and water, today the region has an operating
power capacity of more than 10 GW-
mostly from coal-fired plants, and projects of
up to 15 GW are under construction.
Reliance Power (then known as Reliance
Energy Ltd.), the power-generating arm of
conglomerate Reliance Group, ultimately
acquired Sasan Power in August 2007 at a
levelized tariff of 1.196 rupees/kWh (about
$0.026/kWh at the time). That year, Reliance
also snapped up SPVs and related assets for
another UMPP: the 4-GW Krishnapatnam
project planned for Andhra Pradesh state.
And in 2009, it won rights to set up the Tilaiya
UMPP in Jharkhand state.
Tilaiya was canceled last year, owing
to inordinate delays in land acquisition. As
Reliance told POWER, the Krishnapatnam
UMPP is also in regulatory limbo. The project
was to depend on imported coal from Indonesia,
but following rule changes, the price
of that coal has shot up. " The company has
moved Central Electricity Regulatory Commission
(CERC) for [a tariff revision], citing
POWER | October 2016
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POWER October 2016

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