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The government may not include Reliance Power’s 4,000 MW ultra mega power project (UMPP), at Krishnapatnam in Andhra Pradesh, in its proposal for additional 1 lakh MW power generation in the next five years.
“It is unlikely that the project can be included in the current 12th plan period (2012-17) projects. The company has said that the project is not feasible. The matter is in the court and even if it is resolved, it may not be able to come up by 2017. The work has been stalled,” a Central Electricity Authority (CEA) official said.
The firm, which is setting up the project, has filed a petition in the Delhi High Court after its principal coal supplier, Indonesia, more than doubled the fuel price to $60 per tonne.
Coastal Andhra Power Ltd, a special purpose vehicle (SPV) set up for implementing this UMPP, signed the power purchase agreements (PPAs) with the beneficiary states - Andhra Pradesh, Karnataka, Tamil Nadu and Maharashtra.
In a petition filed in Delhi High Court, the company said, “At the time of entering into the agreement it was understood that the imported coal would be sourced from Indonesia at $24 per tonne, which subsequently shot up to $60 per tonne.”
Indonesian government had introduced a new legislation on September 23, 2011 prescribing that sale of coal from Indonesia would be made at a benchmark price based on the prevalent international market price of coal.
The company, in its petition, said that securing coal based on fixed price and fixed escalation was no longer possible and the very project was rendered unviable.
However, the matter was discussed in various meetings between June and November 2011, but ‘no solution as such could be arrived at’, the company said in the petition.
The power ministry has envisaged setting up 16 such UMPPs in the future to meet the proposed target of adding 1,00,000 MW in the current plan period (2012-17).
Reliance Power bagged the Krishnapatnam UMPP in 2007 through international competitive bidding. This project is one of the three UMPPs being developed by the company. The other two are - Sasan (Madhya Pradesh) and Tilaiya (Jharkhand).
These two plants are domestic coal-based projects.
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