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Home News Power Sector News Reliance seeks tariff increase for Tilaiya UMPP in Jharkhand

Reliance seeks tariff increase for Tilaiya UMPP in Jharkhand

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R-PowerReliance Power's (R-Power) entire portfolio of ultra mega power projects (UMPPs) is in a trouble. Earlier this week, the company sought a tariff increase for the 4,000-Mw power plant at Tilaiya in Jharkhand, which is yet to get off the ground. The company said in its tariff petition filed before the Central Electricity Regulatory Commission (CERC) that land acquisition problems were delaying Rs 24,000-crore project.

R-Power had been facing various issues, including law and order problems, for starting work on the project. "Many employees have been worried and the company is finding it tough to recruit people for the project after one of its general managers were shot dead in Jharkhand while trying to acquire land," said a company official.

Tilaiya is the toughest UMPP in its kitty, as its performance guarantees are twice as much as its other UMPPs, accounting to around Rs 600 crore. Five years back, when R-Power won the bid for its third UMPP at Tilaiya, it was made to pay twice as much in performance guarantee to the government.

The group had already won two UMPPs in the two years prior to bidding for Tilaiya, and the government felt it needed much more assurance to ensure that the then newly split company had the wherewithal to complete the 4,000-Mw project.

The company, which won the bid with Rs 1.77 a unit levelised tariff, had paid higher amount as performance guarantee. It paid Rs 240 crore as the bid bond, and Rs 600 crore was accounted in the form of bank guarantees. "This will make it very tough for the company to return the project," said a government official. An email sent to the company did not elicit any response.

The company filed three petitions with CERC seeking relief for its Sasan UMPP in Madhya Pradesh due to rupee depreciation, change in law during the construction period, and change in law impacting revenue and costs during the operation period. The matter is still being examined by the CERC.

Both Tilaiya and Sasan have captive coal mines, which will provide fuel to the projects. Yet another power project, at Krishnapatnam in Andhra Pradesh, which is an imported coal-based power project, is also facing stalemate. Imported coal from Indonesia has become costlier for power generators after the country changed laws, forcing many power generators to seek permissions from the government to allow them to pass on increased fuel costs to the power purchasers. The company stalled work on Krishnapatnam as well, while Sasan has already commissioned one unit and others are under construction.

Only 19.5 per cent of the land required for the Tilaiya power plant, or 450 acres, has been acquired until now, according to the latest report on the project by the Central Electricity Authority. It is yet to acquire any land for the captive coal block.

While environment and forest clearances for Tilaiya power plant have been received, those for the coal blocks, ie Kerandari B & C blocks, are yet to come. The company has submitted a proposal for forest clearance to the state forest department.

R-Power has an operating power plant of 1,200 Mw at Rosa, Uttar Pradesh. This has been the only power project that it had finished after it raised Rs 11,560 crore through an initial public offering in early 2008.

Source- Business standard


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