The UMPP Scheme

Ultra Mega Power Projects (UMPP) was a program introduced in 2005 by the Ministry of
Power in association with the Central Electricity Authority and the Power Finance Corporation
to address the countrys lingering power deficits and to provide for the growing energy demands
(see Section on Power Scenario on India) of the ever-increasing Indian population and the new
culture of mass consumerism prevalent in the country. With the help of this scheme the
government intended to overcome bureaucratic obstacles hindering the development of large
thermal plants working in the country in order to achieve its objective of Electricity or all by
2012.[1] The UMPPs can actually be seen as a successor or an expansion of the Mega Power
Projects (MPP) that the Government undertook in the 1990s with limited success. In the first of
the two stages that are involved in the UMPP program, the Power Finance Corporation (PFC)
creates a shell company called a Special Purpose Vehicle (SPV) [refer to terminologies for
details]. The purpose of SPV includes securing environmental clearances, acquisition of land and
water, and obtaining commitments for coal, either domestic or from abroad. After the completion
of these steps, private companies are given a chance to acquire the shell company under a
process of competitive bidding, in the second stage. The bidder guaranteeing to sell power at the
lowest levelised tariff (refer to terminology section for details) to the consumers is awarded the
project.[2]
The characteristic features of UMPPs includes:[1]

Use of the SPV

Use of supercritical technology (refer to terminologies for details) for increased fuel
efficiency and to ensure reduction in greenhouse gas emissions;

Allocation and sharing of power among multiple states typically with the help of stateowned electric utilities;

Dedicated captive coal blocks (rather than coal linkages as seen in earlier programs) for
projects located in the interior;

Imported coal for coastal projects (For example Tata Mundra UMPP imports coal from
Indonesia);

Massive scale - typically 4000 MW.

Estimated investment in each UMPP: approximately Rs. 16,000 to Rs. 20,000 crores

Assigned through competitive bidding process(see Terminology section for details)

Developed on build, own and operate(BOO) basis (Terminology section)

Governments responsibility: Provide land, water, coal blocks, environmental clearances

and tie-up for power sale

Private entitys responsibility: arrange funding, technological tie-ups, place orders for key
equipment, execute and operate the project

Originally in 2005, only nine projects were proposed, of which four were planned to be pit-head
projects and the other five were coastal projects that would use imported coal. Later in 2007 few
projects had to be abandoned due to various reasons and later additional projects were proposed.
So far, 16 UMPPs have been planned in various states including Andhra Pradesh, Chhattisgarh,
Gujarat, Jharkhand, Karnataka, Madhya Pradesh, Maharashtra, Orissa and Tamil Nadu.
The present status of the UMPP scheme with proposed project and location has been shown
below: [3]
State

Plant

Owner

MW

Type

Status

Andhra
Pradesh

Krishnapatnam Coastal
UMPP
Andhra
Power Ltd.

Reliance
Power

3960

Coastal

Deferred

Andhra
Pradesh

Nayunipalli

Tatiya
Not yet
Andhra
awarded
Mega Power
Ltd.

4000

Coastal

Proposed

Chhattisgarh Sarguja UMPP Chhattisgarh Not yet

Sarguja
awarded
Power Ltd.

4000

Interior

Cancelled
2013

Gujarat

Tata Mundra
UMPP

Coastal
Gujarat
Power Ltd.

Tata
Power

4000

Coastal

Unit 1
Commissioned
2012; Units 23 in
construction

Jharkhand

Tilaiya UMPP

Jharkhand

Reliance

3960

Interior

Early

UMPP

Special
Purpose
Vehicle

Integrated
Power Ltd.

Power

Development

Karnataka

Tadri UMPP

Coastal
Karnataka
Power Ltd.

Not yet
awarded

4000

Coastal

Deferred

Madhya
Pradesh

Sasan UMPP

Sasan
Power Ltd.

Reliance
Power

3960

Interior

Unit 1
commissioned
2013; Units 25 in
construction

Maharashtra

Girye UMPP

Coastal
Karnataka
Power Ltd.

Not yet
awarded

4000

Interior

Deferred

Odisha

Sundargarh
UMPP

Orissa
Integrated
Power Co.
Ltd.

Not yet
awarded

4000

Interior

Proposed

Odisha

Sakhigopal
UMPP

Sakhigopal
Integrated
Power Co.
Ltd.

Not yet
awarded

4000

Interior

Proposed

Odisha

Ghogarpalli
UMPP

Ghogarpalli
Integrated
Power Co.
Ltd.

Not yet
awarded

4000

Interior

Proposed

Tamil Nadu

Cheyyur
UMPP

Coastal
Tamil Nadu
Power Ltd.

Not yet
awarded

4000

Coastal
Coastal

Proposed

As explained earlier 4 UMPPs (Figure 2) have been successfully awarded but they continue to
grapple with a gamut of challenges ranging from land acquisition (The landmark Land
Acquisition, Rehabilitation and Resettlement Act, 2013 is expected to address this problem

effectively), mine-related clearances, shortage of domestic coal supply and unprecedented

increase in imported coal prices.

Terminology used:

Special Purpose Vehicle (SPV) - A special purpose vehicle (SPV), also known as a shell
company, is used to provide a temporary sponsor for a project while it goes through the
initial stages of acquiring land, water, coal, and clearances. SPVs are wholly owned
subsidiaries of the Power Finance Corporation (PFC). Once an SPV completed the initial
stage of project development, the project is awarded through a competitive bidding process
to a private owner which proceeds to build, own, and operate ("BOO" in economic parlance)
the coal plant. [4]A shell

Ultra Mega Power Project (UMPP) - Large projects, usually 4000 MW in size, developed
using SPVs.

Supercritical technology - A coal combustion technology that allows higher efficiencies

than older, "subcritical" generation technology. In India, most proposed new plants
are supercritical. In China, most proposed new plants use ultra-supercritical technology,
which allows even higher efficiencies.

BOO
Levelised tariff- Levelised tariff is the tariff arrived by discounting the tariff of 25 years as
calculated by
bidders using assumptions of their choice, as well as, the same given by the Government in the
bidding documents. This is only a tariff to evaluate the various bids and decide a winner. Actual
tariff will differ based on actual escalation of various tariff components at any point of time.
Competitive Bidding Procedure- (from UMPP page)

Positive Impacts of Mundra Project on the Communities and

Environment
Kutch, being situated in the western border of the country, has often seen a lot of foreigners
entering and inhabiting there since time immemorial. It is the biggest district in the country
comprising Anjar, Bhuj, Mundra, Mandvi, Lakhpat, Abdasa-Nalia, Bhachau, Gandhidham,
Rapar, and Nakhatrana talukas.
Mundra was selected as the location for the project the only taluka of Kutch district which was
not devastated by the 2001 Earthquake. To re-develop the region a lot of incentives were given
mostly in tax liabilities by the Gujarat Government for setting up new industries in order to
industrialize the region and produce employment opportunities for the communities. It was
during this time that CGPL (Coastal Gujarat Power Limited) was created in 2007 to regulate,
guide, and collaborate in the developmental initiatives in the region. So, it can be out rightly be
said that the very initiation of the Mundra UMPP Project was done with a commitment to proper
engagement with the community and to understand their needs.
The project influence area of 10 km radius includes Mandvi Taluka cluster and Mundra Taluka,
each made up of about 10 villages, having about 80,000 people (in 2011). The following section
illustrates the positive impacts of the project on these communities:

Understanding the importance of participation of community in any community oriented

development initiatives, many affirmative steps were taken under 8 broad themes- education,
health, drinking water, employability / income generation and livelihood, biodiversity, and
environment, rural infrastructure development, community organization and institution building
and rural energy(Table 3).

Table 3: Positive impacts of Tata Mundra UMPP

The following section illustrates the initiatives taken by the project planners for the welfare of
the community under each themes:
1. Income Generation and Livelihood
Before the initiation of project, the major issues concerning the local communities were lack of
proper employment opportunities, lack of opportunities for higher education, loss of pasture land

for feeding cattle, health problems, migration of skilled manpower, lack of opportunity for
women to be part of income generation activities.
So the following income generating programs were launched by CGPL on yhe lines of Gandhian
principles of self-reliance and self-sustainability of communities:
a) Gaushala- to check the decline in area of pasture land available for feeding cattle. The project
successfully built various centers that supplied fodder and erected two massive gaushala
containing many sheds for storing fodder and many sheds for keeping cattle. This has led to
increase in cattle population and subsequently the milk production and availability in the area.
b) Project Utkarsh- successfully made groups of cattle-rearers in order to increase their
bargaining power, to educate them on livestock rearing, to share the risk and investment needed.
c) Various nutrition kits were provided to children, many ROs were set up to ensure safe
drinking water, check dams established for effective water management.
d) Project Sagarbandhu was rolled out for the welfare of the fishing community through
development of ponds for them and by educating them on fish breeding.
e) Kalaraksha program- Kalaraksha Trust was set up with the sole objective of promotion of
handicrafts by the local artisans. Various fairs and exhibitions are organized to make people
aware and hence preserve the art of these artisans.
f) Vivekananda Research and Training Institute(VRTI) was set up to form groups of women and
train them in activities like sewing, embroidery, tie and dry work etc. and to connect them to
local markets.

2.