Indian experts question suitability of BOOT for power projects

Exports in India warned that the Build-Own-Operate-Transfer (BOOT) model would not be suitable for setting up power plants in the country and could lead to complications.

The Power Ministry has come out with draft norms for UMPPs, and BOOT model for new plants is among the major suggestions. It has sought comments from stakeholders.

According to experts, power projects entail huge investments and could impact their sustainability in the long term if developers are required to transfer them to utilities.

"Built Operate Own (BOO) model is better for the power sector than the BOOT," SBI Capital Vice President Mukul Modi said.

He added that BOOT model would have more complications. As per the draft norms, a project developer has to transfer the assets to the utility after 30 years, which can be further extended by another 10 years.

Global consultancy Ernst & Young's Director (Transaction Advisory Services) Seshan Balakrishnan also said that BOOT model would not be suitable for the power sector.

BOOT model is being successfully implemented in many highways projects.

Noting that BOOT model would not work for the power sector, Jindal Power MD and Group CFO Sushil Maroo said the only source of revenue for power projects are electricity utilities.

For more.

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