Reliance Power sells Tilaiya UMPP to Jharkhand for Rs 1.12 billion

The 4,000 MW Ultra Mega Power Project (UMPP) in Tilaiya, Jharkhand, that Reliance Power won in 2009 at a record low tariff of Rs 1.77 per unit has changed hands now. RPower sold the special purpose vehicle (SPV) formed to execute the project to Jharkhand Urja Vikas Nigam Limited (JUVNL) for Rs 1.12 billion. This leaves India with only two mega-sized coal-based thermal power projects in the hands of private players.


Anil Ambani promoted RPower had exited the project in 2015, citing delay in land acquisition. The SPV -- Jharkhand Integrated Power Limited (JIPL) -- terminated the Power Purchase Agreement (PPA) of its Tilaiya Ultra Mega Power Project (UMPP) in Hazaribagh district of Jharkhand with 18 power off-takers in 10 states for 25 years.


In a notice to the exchanges on Thursday, RPower said, “We hereby inform that the Company has transferred its entire holding of 1,49,900 Equity Shares of Rs 10 each, aggregating to Rs 14,99,000 held in Jharkhand Integrated Power Limited, a Special Purpose Vehicle (SPV) created for development of Tilaiya UMPP, to Jharkhand Urja Vikas Nigam Limited, the Lead Procurer, acting on behalf of Procurers of Tilaiya UMPP.”


Business Standard had earlier reported this likelihood of state purchasing the SPV. 



The company is also learnt to have received bank guarantee worth Rs eight billion from the ten states it had signed the PPA with. Besides Jharkhand, Gujarat, Delhi, Punjab and Haryana were among the states with which the company had signed 25-year contracts for power supply.


The company had planned capital expenditure of Rs 360 billion for the project, and the Kerandari coal block in the North Karanpura coal fields in Jharkhand which was allotted to it for the project.


The Jharkhand government, after a delay of five years, had allotted 470 acres of forest land to the company in 2015 and was in the process of allotting another 1,220 acres by 2016, a state government official had told the paper in 2015.



Reliance Power has moved Delhi High court in May 2014 for a stay on encashment of its Rs 6 billion bank guarantee for the Tilaiya ultra mega power project 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 The case, company officials said would be withdrawn once the payment the termination is through.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 present estimates of the land handover process, the company sources had said the project could not have been completed before 2023-24.


Of the 16 UMPPs the previous United Progressive Alliance government had planned, only four were awarded during the last decade. These projects were awarded on competitive tariff based bidding and executed by a special purpose vehicle. 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 in 2015. 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 per unit and Rs 2.33 per unit for these two UMPPs as well. Tata Power’s Mundra UMPP is embroiled in regulatory tussle over increasing its tariff after the coal cost went up.

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