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. Besides Jharkhand, Gujarat, Delhi, Punjab and Haryana were among the places with which the company had signed 25-year contracts for power supply.
S K G Rahate, principal secretary (energy), government of Jharkhand, told Business Standard that all 18 procurers have taken in-principle decision to accept the termination issued by Reliance Power. "We are more concerned with the future of the project. So as per the terms of the power purchase agreement, Jharkhand as the lead procurer would buy 100 per cent shares and pay for the essential expenditures which is land and other cost of clearances etc," said Rahate.
He, however, declined to disclose the final cost. Reliance Power had in it earlier calculations pegged the compensation at Rs 800 crore.
Company officials said the termination of the PPA would reduce Reliance Power's future capex pipeline by Rs 36,000 crore and also avoid any additional debt burden of Rs 27,000 crore and an equity commitment of Rs 9,000 crore.
The firm had planned capital expenditure of Rs 36,000 crore for the project, which comes along with the Kerandari coal block in the North Karanpura coal fields in Jharkhand.
After a delay of five years, the Jharkhand government had allotted 470 acres of forest land to the company and was in the process of allotting another 1,220 acres by mid-May, a state government official said. Reliance Power has moved the Delhi High Court in May 2014 for a stay on encashment of its Rs 800-crore bank guarantee for the Tilaiya UMPP in Jharkhand.
The case, company officials said, would be withdrawn once the payment the termination is through.
The land required for the coal mine and power project is 17,000 acres. Based on current estimates of the land handover process, the company said the project could not have been completed before 2023-24.
Of the 16 UMPPs the United Progressive Alliance government had planned, only four were awarded. Three of these at Sasan, Tilaiya and Krishnapatnam were to be set up by Reliance Power and the one at Mundra by Tata Power.
Reliance Power's Sasan UMPP achieved completion earlier this year. The Krishnapatnam project in Tamil Nadu, which will run on imported coal, is delayed by clearances. Reliance Power had bid aggressively at Rs 1.29 a unit and Rs 2.33 a unit for these two UMPPs.