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Home News Power Sector News Reliance power quits Tilaiya UMPP unilaterally

Reliance power quits Tilaiya UMPP unilaterally

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ADAGReliance Power has pulled out of the 3,960 MW Tilaiya ultra mega power project (UMPP) in Jharkhand, continuing its withdrawal from key infrastructure projects over the past couple of years. The Anil Ambani-controlled group companies have already walked out of prestigious metro projects both in Delhi and Mumbai, while in 2013 group company Reliance Infrastructure also decided to withdraw from the 5,000 crore-Worli-Haji Sea Link project after two years of dispute with the government.

The power generation company of the group  announced that it is terminating the power purchase agreement (PPA) for Tilaiya UMPP, which it won under a competitive bidding process in 2009, due to inordinate delays in land acquisition.

The termination notice has been sent to all the 18 power off-takers in 10 states, where 25-year PPAs have been signed. The PPA required procurers to handover land and other clearances by February 2010.

"Land for power station and related infrastructure have not been handed over by procurers despite 5.5-year delay. Even land acquisition process for captive coal block is yet to be initiated by the government. More than 25 review meetings and extensive follow-up with state government failed to yield any concrete results," the company said in a statement.

Interestingly, the company has already filed a petition with Central Electricity Regulatory Commission (CERC) for revision in tariff of Tilaiya UMPP due to the delays.

Termination of PPA amo­unts to quitting the project but this self announced withdrawal from a binding agreement with states might land the company in further trouble. Sources in power ministry said the termination could be allowed only by Central Electricity Regulatory Commission (CERC) or by all the procuring states that sign the PPA. "This action of the company can be challenged. The procurer states would take further action after a re-examination of PPA terms," sources said.

"The PPA cannot be terminated unilaterally by the company as the agreement bars such acts. Prior information to the regulator and its approval is a must," said an official of Power Finance Corporation (PFC). PFC is the nodal agency for UMPPs in the country and is responsible for conducting the bidding process for these 4000 mw projects.

A Reliance Power official on condition of anonymity said the company was right in terminating the contract as terms of PPA specify obligations for both parties.

"The lead procurer — Jharkhand — has failed to comply with its set of obligation to provide us even a single acre out of 17,000 acre of land required for project, related infrastructure and mine, even though we have complied with ours. At this rate, the UMPP cannot be completed till 2023-24 at the earliest. So, we are right to terminate the PPA," the official said.

Due to the delays in land acquisition, the Tilaiya project is yet to achieve financial closure. Reliance Power proposed an investment of Rs 36,000 crore in the Jharkhand project, which it now intends to use for its other initiatives.

"The sudden and unilateral decision of Reliance power is surprising. In fact, a joint monitoring committee (JMC) meeting in this regard was held on April 17 in Ranchi, which was attended by officials of CEA, state government and the developer in which specific time bound commitments for hading over of land were made by the state government," the official source said.

Reliance Power was awarded coal based Tilaiya UMPP in Jharkhand in February 2009 when the special purpose vehicle Jharkhand Integrated Power was transferred to the company. The company won rights to set up a 3,960 mw power plant after bidding a levelised tariff of Rs 1.77 per unit.

Earlier, the company had commissioned its 3,960 mw Sasan UMPP in Madhya Pradesh, 12 months ahead of PPA schedule with an investment of over Rs 27,000 crore. The company has also won rights for another UMPP — Krishnapatnam — in Andhra Pradesh. The progress on this UMPP is also stalled due to delays in statutory clearances and land acquisition.

Apart from the UMPPs, Reliance Power has commissioned 1,200 mw Rosa Power project in Uttar Pradesh, 600 mw Butibori Power project in Maharashtra as well as 185 mw of solar and wind projects located in Rajasthan and Maharashtra. The company has an operating portfolio of 5,945 mw, based on coal and renewable energy.

Source- PTI


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