Coal Ministry show-cause to RPower on mine development delay

Coal Ministry show-cause to RPower on mine development delay

The Ministry of Coal has issued a show-cause notice to Reliance Power asking why it should not invoke the bank guarantee due to delay in development of the Kerandari B & C coal blocks given to the company’s erstwhile Tilaiya ultra mega power project.

The company, as per the notice, has been delaying the development of two coal blocks associated with its 4,000 Mw Tilaiya Ultra Mega Power Project (UMPP), which was awarded to it in 2009. Reliance Power’s bank guarantee for the Kerandari B & C coal blocks is worth ₹800 crore.

The notice put on the Coal Ministry’s website stated that Reliance Power and its subsidiary Jharkhand Integrated Power Ltd (JIPL) “cannot be absolved of their responsibility of paying for damages for non-achievement of milestones set for the development of the Kerandari B & C coal blocks”.  “The Ministry has considered of the termination of the PPA of the Tilaiya UMPP as extraneous to the development of the coal blocks,” the notice added.

It has sought a reply from the company within 15 days on why the bank guarantee should not be deducted.

Reliance Power in a statement said the notice is just on the website and “the same has not been received by Reliance Power Ltd till now.”

After terminating the power purchase agreement (PPA) for the Tilaiya UMPP, Reliance Power had written to the Coal Ministry for release of the bank guarantee given for the Kerandari B & C coal blocks.

“Reliance Power terminated the PPA for Tilaiya UMPP entered into with 18 procurers, vide notice dated April 28, 2015, nearly 14 months ago. The termination was due to prolonged delay in fulfillment of the procurers’ development period obligations in respect of land for power plant and coal mine for more than five-and-half years. The Procurers led by the Lead Procurer, Jharkhand Urja Vikas Nigam Ltd (JUVNL) have already accepted the termination of the PPA due to procurers’ event of default in November 2015 or nearly eight months ago,” the company said in a statement.

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