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Sasan Ultra Mega Power Project (UMPP) is an upcoming 3,960 MW pit-head coal-based power plant inMadhya Pradesh. The project is the first domestic coal-based UMPP awarded inthe country by the Government of India.

In order to meet the growing gap between demand and supply of power, the government has come up with the concept of UMPPs. These large scale projects are aimed at building large capacities at low costs which can sell power at low tariffs to consumers. The projects are awarded to developers on tariff-based competitive bidding on a Build-Own-Operate basis. Power Finance Corporation (PFC) the financial institution under the Ministry of Power,is the nodal agency for getting the basic infrastructure like land, water supply, environment clearances, etc. for UMPPs.

Sasan UMPP is a pit-head power project and has been allocated three captive coal mine blocks – Moher, Moher Amlori extension and Chhatrasal – which have reserves in excess 750 million tones.Plans for development of these mines were prepared and approval for the same was got in a record period of seven months. The approved mine plan of all three mines put together envisages production of 25 million tonnes of coal per annum making these mines among India's largest.

Sasan UMPP along with the coal mine would on completion become the largest integrated coal-cum-power plant in the country. The scale of the project can be better appreciated from the fact the project and coal mine together involve almost 10,000 acres of land of which almost 7,000 acres would be coal mines.

The project was awarded for development to the company through a competitive bidding process and transferred to the company in August 2007. Given the scale of the project and the clearances for land, environment, water, forest etc required to be undertaken by the Government, many of these approvals have been obtained after the project transfer. Many of these activities have now been completed and construction work at the site has now commenced. The completion of these activities for a project of this magnitude would rank as the fastest when compared to a power and coal mine project of a comparable scale.

The project achieved financial closure in April 2009. The lenders for the project are a consortium of almost 14 banks led by State Bank of India, the country's largest bank. The lending was done on a project finance basis and with an estimated project cost of around Rs. 20,000 crores (US$ 4 billion) with a debt-equity ratio of 75:25, this making it the largest debt on project finance basis across industries in India.

What is even more commendable is that Sasan was the first ever integrated-power cum coal mine project. Also, the economic environment when the financial closure was achieved was particularly challenging considering that the world was just about starting to recover from the global financial crisis. It is therefore not surprising that the financial closure for Sasan was awarded Euromoney’s best project financing deal of the year.

Subsequent to achieving many of the initial developmental milestones, construction activities have commenced at the site. As per the original schedule contemplated at the time of bidding, it was envisaged that the project would start generating power from 2013. First unit of 660 MW was commissioned on 30th March 2013.


Power generated from the project would be sold to 14 procurers in seven states in the country (Madhya Pradesh, Punjab, Uttar Pradesh, Delhi, Haryana, Rajasthan and Uttarakhand) at a levelized tariff of Rs. 1.196/kwh (Kilo Watt Hour). The low tariff of the project is primarily because of the low cost of generation due to economies of scale, its pit head location and captive mines resulting in better cost control and low financing costs through better financial planning. Further, the project will be employing the advanced ‘super-critical’ technology for its power plant. This results in higher operating efficiencies and also reduces the emissions thereby making it an environment friendly technology.

The project team at Sasan is a blend of experience and youth.Many members of the team have rich experience in building power plants in India. Other than the employees of the company, the execution team would comprise of employees of vendors and other contractors and it is expected that at the peak of the construction activities there would be more than 20,000 people working at the project site.

 

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