Land acquisition trouble Anil Ambani led Reliance Power terminates 3960 MW Tilaiya ultra mega project


New Delhi – Anil Ambani-led Reliance Power today said it has terminated the contract for Rs 36,000 crore Tilaiya ultra mega power project in Jharkhand over inordinate delays in land acquisition.

The firm had, in August 2009, won rights to set up a 3,960 MW power plant at Hazaribagh in Jharkhand after bidding a levelised tariff of Rs 1.77 per unit but couldn’t start work on the project as the state government had not provided the required land even after more than five years.

Jharkhand Integrated Power Ltd, a wholly-owned subsidiary of Reliance Power, “has terminated the Power Purchase Agreement (PPA) of its 3,960 MW Tilaiya Ultra Mega Power Project (UMPP) in district Hazaribagh, Jharkhand,” the company said in a statement.

JIPL, a special purpose vehicle created for implementing the project, had signed PPA with 18 power off-takers in 10 states for 25 years. The project was based on captive coal blocks for which coal was to be sourced from Kerendari BC coal mine block.

The total land requirement for the project was over 17,000 acres.

According to the statement, there has been a delay of over 5 years in land acquisition by the state government for the power plant, captive coal blocks and related infrastructure.

The PPA required procurers to handover land and other clearances by February 2010.

“However, the required land is yet to be made available. Even the forest land in the power station area, for which the Stage-II Forest Clearance was accorded by central government way back in November 2010, has not been handed over to JIPL till now.

“As regards the coal block, the land acquisition process is yet to get initiated, for which the application was submitted way back in February 2009,” the statement said.

The company said in spite of more than 25 review meetings and extensive and continuous follow-ups with the state government, the required land is yet to be made available.

“Even after relentlessly pursuing the project development for nearly five and half years, due to procurers’ failure to provide land for the project, execution time-frame continues to remain uncertain,” it said, adding that the project cannot be completed before 2023-24, going by the present estimate of land handover process.

With the termination of this project, Reliance Power has reduced its future capital expenditure by Rs 36,000 crore and remains financially conservative with debt equity ratio of 1.5:1, which is one of the lowest in the sector.

According to an analyst with a leading brokerage house, “the move by the company to wriggle out of unviable projects where there seems to be no definite timeline for completion is a big positive for the company.

“This demonstrates the intent and strategy of the management to be more focussed on the projects which are time bound and reflect clarity on the capex front as well.”



Asmaa Mubita is a Kenyan journalist of international repute with over fifteen years of experience in broadcast journalism. Asmaa Mubita began his journalism career at the Kenyan state broadcaster (KBC) and later worked at the KTN owned by the Standard Group and Citizen Television, the flagship brand of Royal Media Services. These exploits together with his reporting experience with the Voice of America, CNN and BBC have been rewarded with local and global recognition.