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The government is mulling over limiting the number of UMPPs per bidder. The government has sought private investment in 13 projects through competitive bidding. However, out of last four UMPP bids Reliance Power has bagged three, which is why government is considering putting cap on number of UMPPs a bidder can get.
Our view is that given that the projects are awarded through a transparent mechanism of competitive bidding rather than through the “old fashioned” MoU route, this will be a step in the wrong direction. What motivates the government to adopt this stand? If it is the issue of competition then it is unfounded, as currently only 12 percent of the installed capacity is in the private sector. Why did this issue not concern the government when the Central power utility NTPC and NHPC together have 35 percent of the installed capacity?
Our view is that CDM is a flawed mechanism to address the problem of climate change. CDM and the manner in which it is operationalized, shifts the onus of reducing GHGs to the developing world. On the other hand the developing world is using this mechanism as a lucrative opportunity. The CDM fails as a market because accounting tricks allow participants to manufacture Certified Emissions Reductions at little or no cost