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This article has been modified. Please read the clarification at the end.
The Anil Ambani-promoted Reliance Power has walked out of one of the three 4,000-Mw power projects awarded to it, citing delay in land acquisition.
The company's special purpose vehicle, Jharkhand Integrated Power, terminated the power purchase agreement with 18 buyers in 10 states for the Tilaiya Ultra Mega Power Project (UMPP) in the Hazaribagh district of Jharkhand.
The Jharkhand government, after a delay of five years, had allotted 470 acres of forest land to the company and was in the process of allotting another 1,220 acres by mid-May, said a state government official.
The land required for the coal mine and power project is 17,000 acres.
| EXIT TILAIYA |
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"Reliance Power was asked to submit payment for 1,220 acres by May 15 and the other patches of land would have been transferred to the project by June 30," S K G Rahate, principal secretary (energy), Jharkhand, told Business Standard. He said specific timelines were drawn for execution of the UMPP after a review of the project in April.
Senior officials in Power Finance Corporation said Reliance Power's pulling out of the power purchase agreement would lead to arbitration because tariffs had been decided for 25 years.
The Central Electricity Regulatory Commission (CERC) will need to examine the development. Sources in the know said the regulator was not consulted by Reliance Power before terminating the agreement.
"The company has filed cases for tariff revision in which the beneficiaries [states buying power] filed their responses recently," said a CERC official, adding the regulator would need to look at whether the power purchase agreement allowed unilateral termination.
"So far, their [Reliance Power's] excuse was they were not receiving land and, hence, had to file for tariff revision. The company was stalling execution of the project citing delay of state sanctions," said a senior official in the Jharkhand government in the know of the matter.
"The required land is yet to be made available. Even the forest land in the power station area, for which stage-II forest clearance was accorded by the central government in November 2010, has not been handed over till now. As regards the coal block, the land acquisition process is yet to be initiated, for which the application was submitted in February 2009," a Reliance Power press release said.
Based on present estimates of the land handover process, the company said the project could not have been completed before 2023-24.
| PROJECTS RELIANCE HAS PULLED OUT OF |
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DELHI AIRPORT METRO (R-INFRA) PPA with DMRC; Cost: Rs 5,800 cr Reliance Infra: Rs 3,000 cr with 1% equity PROBLEMS: Technical snags in civil infrastructure built by DMRC, closed since July 2012 MUMBAI METRO (PHASE 2) (R-INFRA) PPA with MMRDA; Cost: Rs 11,000 crore R-infra equity: Rs 2,332 cr PROBLEMS: MMRDA terminated contract, citing slow construction by the company WORLI-HAJI SEA LINK (R-INFRA) PPA with MSRDC Cost: Rs 5,100 cr PROBLEMS: MSRDC terminated contract with R-Infra, citing differences with company over cost of funding FARIDABAD-GURGAON TOLL HIGHWAY (R-INFRA) Build-operate-transfer model project with Haryana govt, under the aegis of HPWD. Cost: Rs 779 cr Construction cost paid to Haryana: Rs 100 cr PROBLEMS: Non-payment of toll by truckers, violence by local truck unions |
Rahate said the Jharkhand government would consult all stakeholders and legal experts. "We will take necessary action in this case," he said, not ruling out the possibility of moving CERC.
Reliance Power was awarded the Tilaiya UMPP in February 2009 at a levelised tariff of Rs 1.77 a unit. The project was allocated the Kerandari BC captive coal mine block for fuel.
"The power ministry will examine the matter with the procuring states and take action," said a power ministry official.
Of the 16 UMPPs planned by the previous United Progressive Alliance government, only four were awarded: three to Reliance Power in Sasan (Madhya Pradesh), Tilaiya and Krishnapatnam (Andhra Pradesh); and one to Tata Power in Mundra (Gujarat).
Reliance Power's Sasan UMPP achieved completion last week. The Krishnapatnam UMPP, which will run on imported coal, is held up by clearances.
| Correction |
| Reliance Power has clarified that it has not pulled out of Gurgaon-Faridabad Toll Road Private Limited, contrary to what was stated in the report. The construction cost paid to Haryana as an upfront fee is estimated at Rs 150.3 crore. Also, the Mumbai Metro Line-2 and Western Sea Link projects were terminated with mutual agreement between the Maharashtra government and the company. The clarification also notes that though the Jharkhand government may have allotted only 470 acres of land, it has not been given possession of even one acre of land so far to start work on the Tilaiya ultra mega power project. The errors are regretted. |
