Anil Ambani-led Reliance Power’s wholly-owned subsidiary, Jharkhand Integrated Power Ltd. (JIPL), has terminated the power purchase agreement (PPA) of its 3,960-MW Tilaiya Ultra Mega Power Project (UMPP) in Hazaribagh district of Jharkhand owing to delay in allotment of land for the project.
On tariff-based bidding, the Tilaiya UMPP was awarded to JIPL, the special purpose vehicle (SPV) of Reliance Power, in February 2009 for implementation of the project.
After the project was handed over in August 2009, JIPL had 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.
As per conditions laid down in the PPA, the procurers needed to perform certain obligations by February 2010.
These included 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 Ministry of Environment and Forests for the coal mines.
“However, the required land is yet to be 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,” Reliance Power said in a statement.
As regards the coal block, the land acquisition process was yet to be initiated, for which the application was submitted way back in February 2009, it added.
“JIPL, on its part, has 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 last five-and-a-half years, the required land is yet to be made available,” Reliance Power said.
It said that the execution time-frame remained uncertain due to procurers’ failure to provide land for the project.
“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.
This decision will reduce the future capex pipeline of Reliance Power by nearly Rs.36,000 crore.
Reliance Power, which was awarded three UMPPs out of four announced then, has so far completed the execution of one UMPP at Sasan in Madhya Pradesh. The fate of the company’s other UMPP at Krishnapatnam in Andhra Pradesh is uncertain.
“Reliance Power remains committed to profitable growth and value creation for its stakeholders. Going forward, Reliance Power will focus on developing clean and green portfolio of renewable and hydro power projects,” the company said.