The Uttar Pradesh Cabinet on Tuesday approved the procurement of 1,500 MW of electricity from a 1,600 MW thermal power project under a 25-year agreement using the DBFOO (Design, Build, Finance, Own, Operate) model. The project is expected to be operational by the financial year 2030–31.
Awarded to the lowest bidder at a competitive tariff of `5.38 per unit, the power purchase deal is set to deliver significant savings — around `2,958 crore —for the state-owned UP Power Corporation Limited (UPPCL). Once operational, the power will be supplied at `6.10 per unit, which is considerably lower than the current rates of `6.60 to `9 per unit charged by existing thermal power plants such as Jawaharpur, Obra, Ghatampur and Panki.
Announcing the Cabinet decision, Energy Minister AK Sharma said the move was part of the state’s broader strategy to ensure affordable and reliable electricity for both domestic and industrial users. He noted that the project not only meets financial prudence standards but also offers better pricing than similar
contracts signed by other states or with public-sector power producers.
“The bidding process began with a Request for Qualification in July 2024. Out of seven interested firms, five submitted financial bids. After negotiations, the lowest bid — comprising `3.727 per unit as fixed charges and `1.656 per unit as fuel charges — was accepted,” Sharma said.
Studies by the Central Electricity Authority and the Uttar Pradesh Electricity Regulatory Commission project an additional requirement of 10,795 MW of thermal power in the state
by 2033–34.
To address this, the state government has launched this competitive bidding process and simultaneously laid out a roadmap for generating 23,500 MW of renewable energy.
The upcoming thermal project will help meet Uttar Pradesh’s base load demand while maintaining cost efficiency. Under the DBFOO model, the private developer is responsible for building, financing, owning, and operating the plant.
The government will facilitate coal linkages and purchase electricity at the
agreed tariff, ensuring long-term power security for the state.