RPower pulls the plug on Tilaiya project

Reliance Power on Tuesday said its wholly owned subsidiary, Jharkhand Integrated Power Ltd (JIPL), has exited the 3,960 MW Tilaiya Ultra Mega Power Project.

The Anil Ambani Group-controlled company has blamed non-availability of land and issues related to forest clearances for cancelling the Power Purchase Agreement (PPA) signed with 18 power companies across 10 States.

Under the agreement, the government was supposed to hand over the possession of the land for the power station and water intake pipeline by February 2010. Reliance said that even though it had completed all obligations under the PPA and in-spite of more than 25 review meetings and continuous follow-ups with the Jharkhand Government over the last five-and-a-half years, the required land is yet to be made available. “Based on the present estimates of the land handover process, the project cannot be completed before 2023-24,” the company said in a statement.

Even the forest land in the power station area, for which the stage-II forest clearance was accorded by the Centre, way back in November 2010, has not been handed over to Jharkhand Integrated till date.

As regards to the coal block, the land acquisition process is yet to be initiated, for which the application was submitted way back in February 2009, the company said, adding that the issuance of notices under Section 9 of Land Acquisition Act, would have helped in land acquisition process for coal mines and fuel transportation system.

A senior Power Ministry official said the move by Reliance was “unilateral’ and “sudden” and it will be up to the 10 procurer States to take any action on the termination notice as it does not fall within the purview of the Centre. The 10 procurer States are Jharkhand, Delhi, Uttar Pradesh, Punjab, Rajasthan, Haryana, Madhya Pradesh, Gujarat, Maharashtra and Bihar.

The official added that even though there have been delays in the past, the Jharkhand Government has recently shown a strong commitment for handing over the required land.

“Time bound commitments have been made by the Jharkhand Government for handing over the land.

“It is pertinent to mention that the developer has also filed a petition with the CERC for a revision in tariff,” the official said.

While the development could worsen India’s power crisis, for Reliance the exit will reduce the future capital expenditure by ₹36,000 crore. Reliance Power stock price was up 4.39 per cent to close at ₹58.25 a piece on the BSE.

The decision to set up a series of ultra mega power project was taken by Union Power Ministry in late 2005. In the first phase, the projects were to come up at Mundra in Gujarat, Girye in Maharashtra, Sasan in Madhya Pradesh, Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand.

The Girye project never saw the light of the day because of agitation by local residents in Maharashtra. Mundra was fully commissioned by Tata Power in March 2013.

The bids for Sasan and Krishnapatnam project were also won by Reliance Power. On April 22, the Madhya Pradesh-based Sasan project achieved full commercial operation pumping out 3,960 MW to the grid. The Krishnapatnam project ran into some financial and regulatory hurdles due to a sharp increase in the price of Indonesian coal. Efforts are on to revive the project.

The Tilaiya project was awarded to the company in 2009, based on a tariff-based bidding, which was managed by Power Finance Corporation (PFC). The JIPL, the Special Purpose Vehicle for implementing the project, was handed over to Reliance Power by PFC in August 2009.

The project was to come up in Hazaribagh district of Jharkhand and coal allocation was to be from the Kerendari BC captive coal mine block.

COMMENT NOW