The formalities with the 18 procurers in 10 states for the release of money are at final stage and the company hopes to achieve closure very soon, a person familiar with the matter said.
The power producer had in April last year given up the project, saying the host state, Jharkhand, had not co-operated in land acquisition, captive blocks and related infrastructure over the previous five years.
If it can get the bank guarantees of the procurers encashed, it would be a big relief for Reliance Power, which on June 21 was served a show-case by the Coal Ministry asking it to explain the reasons for delays in developing coal mines allocated for the Tilaiya project.
"You are called upon to show cause... As to why the delay in the development of the coal block should not be held as violation of the terms and conditions of the allocation of Kerandari B&C coal block and why the bank guarantee should not be deducted for non-achievement of milestones," the ministry said in the notice.
The Coal Ministry has a bank guarantee of Rs 208 crore for Kerandari B&C coal blocks allocated for the Tilaiya project.
Responding to the notice, Reliance Power has said it "terminated PPA for Tilaiya UMPP entered into with 18 procurers nearly 14 months ago. The PPA termination was due to prolonged delay in fulfilment of the procurers' development period obligations in respect of land for the power plant and coal mine for more than 5 years".
"The procurers led by the Lead Procurer, Jharkhand, Urja Vikas Nigam (JUVNL) have already accepted the termination in November 2015," it added.
The company further said the Power Finance Corporation (PFC), the nodal agency for ultra mega power projects (UMPPs), has also recommended PPA termination due to procurers' event of default and communicated the same to the Ministry of Power and the Ministry of Coal.
The company also added that it had replied to a similar notice from the Coal Ministry in January 2014 and there was no communication from the ministry on this thereafter.
A person involved in the settlement process said the
procurers are in the last lap to acquire Jharkhand Integrated Power, the special purpose vehicle for Tilaiya UMPP, from Reliance Power.
In November 2015, the offtakers of Reliance Power's 4,000-mw Tilaiya UMPP in Jharkhand had agreed to terminate their power purchase agreements (PPAs) and compensate Reliance Power for costs and bank guarantees aggregating Rs 714 crore.
Reliance Power had bagged the project in 2009 through competitive bidding by quoting a tariff of Rs 1.77 per unit. The company in April 2015 announced its exit from the project, citing a five-and-a-half-year delay in handing over of land for the project.
The project, which required 17,000 acres, was offered the Kerendari B&C coal block as a captive mine. The company had also said the project, which was to come up by 2015-17, would not be completed before 2023-24, given the prevailing status of land acquisition.
The termination of the PPAs will reduce Reliance Power's future capital expenditure burden by nearly Rs 36,000 crore, thereby avoiding an additional debt burden of nearly Rs 27,000 crore as well as an equity commitment of Rs 9,000 crore.
This fits in well with the parent Reliance Group's larger business architecture for future as it focuses on the capital-intensive defence manufacturing.
The group is also making efforts to lighten its financial load in telecom and other sectors. Reliance Power too has shifted its focus to renewable energy.
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