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States » NorthPosted at: May 6 2025 4:25PM


UP govt to buy power at cheaper rate under DBFOO model

Lucknow, May 6 (UNI) In a step towards energy self-reliance, the Uttar Pradesh government has decided to purchase 1,500 MW power from a 1,600 MW thermal project through a 25-year bid under the Design, Build, Finance, Own and Operate (DBFOO) model.
A proposal was approved during a meeting of the state cabinet which was chaired by Chief Minister Yogi Adityanath at Lok Bhawan on Tuesday.
Awarded to the lowest bidder at Rs 5.38 per unit, the deal is expected to save UP Power Corporation Limited (UPPCL) around Rs 2,958 crore. Power supply is set to begin by 2030–31 at a competitive rate of Rs 6.10 per unit, significantly cheaper than current thermal sources charging Rs 6.60 to Rs 9 per unit.
This project offers electricity at a significantly lower cost than many of the state's existing and upcoming thermal power projects. While tariffs from plants like Jawaharpur, Obra, Ghatampur and Panki range between Rs 6.60 and Rs 9 per unit, the new project under the DBFOO model will deliver power at just Rs 6.10 per unit.
Giving details of the proposal passed by the cabinet, Energy Minister AK Sharma said that this step aligns with the state's efforts to meet growing energy demands and ensure an affordable power supply for both domestic and industrial consumers. He said the procurement deal is more economical than similar agreements signed with other states and even cheaper than existing contracts with public-sector power plants.
He said, "The selection process began with a Request for Qualification in July 2024, attracting interest from seven companies. Five of them submitted financial bids and after negotiations, the lowest bid of Rs 5.38 per unit, comprising Rs 3.727 in fixed charges and Rs 1.656 in fuel charges, was accepted."
The Minister said that as per studies by the Central Electricity Authority and the UP Electricity Regulatory Commission, the state will require an additional 10,795 MW of thermal power by 2033–34. "In response, the government has launched this bidding process and outlined a roadmap for generating 23,500 MW of renewable energy," he said.
He said that the new thermal project, which will be operational by 2030–31, will help meet base load demand and ensure a reliable and affordable power supply for UP's growing energy needs. "Under the DBFOO model, the private entity builds, finances, owns and operates the plant, while the government provides coal linkage and purchases electricity as per the agreed tariff," he said.
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