Anil Ambani-led Reliance Power is looking forward to secure Rs. 714 crore as bank guarantees and compensations from 18 procurers of electricity after terminating the 4000 MW Tilaiya Ultra Mega Power Project (UMPP) in Jharkhand, citing delay in land allotment in April last year, as reported by PTI.
The company is set to recover Rs. 600 crore as bank guarantees from the procurers who had agreed to purchase electricity and the rest of Rs. 114 crore as compensation for other expenses borne since the initiation of project in 2009. The report cites that the agreement with the 18 procurers in the last lapse.
The Power Purchase Agreement (PPA) was cancelled in 2015 by the company since the required land, water pipeline and clearance notice from the ministry of forest and environment were not handed over to the company as per the agreement till 2015.
In 2007, the coal ministry had earmarked Kerandari B and C block for the project's coal requirements. The company had vested a bank guarantee of Rs. 208 crore as security for the coal blocks.
The ministry on June 22 issued a notice seeking explanation from the power company as to why the bank guarantee, submitted by the company when securing the coal block, should not be seized for not delivering power, according to a Mint report.
"Reliance Power 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," the company was quoted as saying in response to the ministry's show-cause notice by the PTI report.
The company also added that it had responded to an earlier notice issued by the ministry in January 2014.
Earlier this year, the company wanted to close the 4000 MW Krishnapatnam UMPP project in Andhra Pradesh citing increasing coal cost which was imported from Indonesia, among other reasons.
Reliance Power registered a 15.8% increase in net profit in the fourth quarter of financial year 2015-2016