UMPP to get protection from price fluctuations of imported coal

Ultra Mega Power Projects are likely to be shield from future price increase in case of imports. According to a press release from the power ministry, it has issued guide draftlines for UMPP projects that are using imported coal. It may be noted, Tata Power project in Mundra is still awaiting for compensatory tariff, while Reliance Power has stopped construction at its Krishnapatnam.

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. Earlier projects had no such guidelines and had lead to litigation and other legal tangles. The above move is likely to generate investor interest in UMPP.

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