The Reserve Bank of India (RBI), has approved loans to Ultra Mega Power Projects (UMPPs), to be regarded as secured debt even though the site and the plant will be owned by distribution utilities and not the winning bidder.

As per the proposed bidding norms, ultra mega power projects and other such location specific plants will be owned by power distribution utilities, and the bidders will merely be contractors for constructing the project, and operating them for 30 years.

However, the proposed framework provides that the companies and the distribution utilities can jointly mortgage the site and the generation station with the banks during the tenure of the loan. The power projects will be transferred to the distribution utilities at the end of the concession period for a cost similar to the case of other infrastructure projects in road and port sectors.

Power Minister, Jyotiraditya Scindia, had approached RBI on the issue as lenders said debts to the proposed projects would be risky in the absence of ownership by the borrower.