Reliance Power terminates PPA for Rs36,000-cr Tilaiya project

Anil Ambani Group company Reliance Power has terminated the power purchase agreement of the Rs36,000-crore Tilaiya ultra mega power project in Jharkhand over inordinate delays in land acquisition.

Reliance Power had won the right for setting up a 3,960 MW power plant at Hazaribagh in Jharkhand way back in August 2009, after bidding at a levelised tariff of Rs1.77 per unit. However, the company couldn't start work on the project even after 5-1/2 years and 27 review meetings with the authorities, as the state government had not provided the required land as yet.

Reliance Power today announced that its wholly owned subsidiary, Jharkhand Integrated Power Limited (JIPL), has terminated the power purchase agreement (PPA) of its 3,960 MW Tilaiya Ultra Mega Power Project (UMPP) in Hazaribagh district of Jharkhand.

Based on tariff-based bidding managed by Power Finance Corporation (PFC), Reliance Power was awarded the Tilaiya UMPP in February 2009. JIPL, the special purpose vehicle (SPV) for implementing the project, was handed over to Reliance Power by PFC in August 2009. JIPL has signed a power purchase agreement (PPA) with 18 power off-takers in 10 states for 25 years. For fuel security, the project was allocated Kerendari BC captive coal mine block.

According to Reliance Power, the PPA requires procurers to perform the following development period obligations by February 2010:

• Handing over the possession of the land for the power station and water intake pipeline;
• Issuance of notice under section 9 of Land Acquisition Act in respect of land for coal mines and fuel transportation system; and
• Site clearance from the ministry of environment and forests for the coal mines.

However, Reliance Power said, the required land has not yet been made available. Even the forest land in the power station area, for which the Stage-II forest clearance was accorded by the central government way back in November 2010, has not been handed over to JIPL till now.

As regards the coal block, the land acquisition process is yet to get initiated, for which the application was submitted way back in February 2009.

JIPL claims to have undertaken comprehensive and concurrent efforts on a number of parallel tracks for development of the project and completed all development period obligations under the PPA, which were not dependent on the inputs from the procurers.

''However, in-spite of more than 25 review meetings and extensive and continuous follow-ups with the state government of Jharkhand over the last 5-½ years, the required land is yet to be made available. Even after relentlessly pursuing the project development for nearly 5-½ years, due to procurers' failure to provide land for the project, execution time-frame continues to remain uncertain.

''Based on the present estimates of the land handover process, it is estimated that the project cannot be completed before 2023-24. Considering all these facts, JIPL has decided to terminate the PPA with the procurers,'' reliance Power said in a release.

According to the company, the decision will reduce the future capex pipeline of Reliance Power by nearly Rs36,000 crore.

Reliance Power cited its Sasan UMPP in Singrauli district of Madhya Pradesh where it has recently announced successful achievement of commercial operations by operating all six units comprising 3960 MW capacity. In fact, Reliance Power said, the Sasan UMPP has been successfully commissioned 12 months ahead of PPA schedule.

The five units of 660 MW each totaling 3300 MW of the Sasan project were commissioned in just about 12 months, Reliance Power noted.

The Sasan UMPP is the largest integrated power plant-cum-coal mining project at a single location in the world, involving investment of over Rs27,000 crore.

Reliance Power had earlier successfully commissioned its 1,200 MW Rosa Power Project in Uttar Pradesh, the 600 MW Butibori Power Project in Maharashtra, the 185 MW solar PV, solar CSP and wind projects in Rajasthan and Maharashtra.