RPower terminates PPA for 3,960 Mw Tilaiya UMPP in Jharkhand

JIPL had signed a Power Purchase Agreement (PPA) with 18 power off-takers in 10 states for 25 years

Reliance Power (RPower) on Tuesday 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.
 

JIPL had signed a PPA with 18 power off-takers in 10 states for 25 years. 

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. For fuel security, the project was allocated the Kerendari BC captive coal mine block.
 

According to a company press release, the PPA requires procurers to hand over the possession of the land for the power station and water intake pipeline by February 2010. Other development period obligations included issuance of notice under Section 9 of the Land Acquisition Act in respect of land for coal mines and fuel transportation systems. Besides, site clearance was required from the ministry of environment and forests (MOEF) 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. 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,” the company said.
 

In spite of more than 25 review meetings and extensive 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, it is estimated that the project cannot be completed before 2023-24, the company said.
 

Considering all these facts, JIPL has decided to terminate the PPA with the procurers. This decision will reduce the future capex pipeline of Reliance Power by nearly Rs 36,000 crore. 
 

RPower recently announced the successful achievement of commercial operation date for all six units comprising 3,960 Mw capacity of the Sasan UMPP in Madhya Pradesh's Singrauli district. The Sasan UMPP is the largest integrated power plant-cum-coal mining project at a single location in the world, involving investment of over Rs 27,000 crore. 
 

With the completion of its first phase of capex investments of nearly Rs 50,000 crore, RPower has six operating plants with a capacity of nearly 6,000 Mw. With a debt to equity ratio of 1.5:1, one of the lowest in the power sector, RPower remains a financially conservative company, the press release said.
 

Going forward, RPower will focus on developing clean and green portfolio of renewable and hydro power projects. It has already signed a memorandum of understanding (MoU) with the Rajasthan government to develop 6,000 Mw of solar power capacity. The company also has a pipeline of nearly 5,000 Mw of hydro power projects located in the states of Arunachal Pradesh, Himachal Pradesh and Uttarakhand.