Reliance Power eyes Rs 714 crore bank guarantees and compensation from 18 procurers of the electricity project.

Reliance Power eyes Rs 714 crore bank guarantees and compensation from 18 procurers of the electricity project.

After pulling out of Tilaiya UMPP on a host of issues, Reliance Power is planning to secure Rs 714 crore as bank guarantees and compensation from 18 procurers of the electricity project.

It is understood that out of the amount of Rs 714 crore, Rs 600 crore will be in the form of bank guarantees the procurers had offered to buy electricity and another Rs 114 crore as compensation for various expenses incurred by the Anil-Ambani led company.

“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 told PTI.

Company, in April last year exited the project blaming the host state, Jharkhand had not co-operated in land acquisition, captive blocks and related infrastructure over the previous five years.

On June 21, company 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”.

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“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,” company said.

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.

In November 2015, the off takers 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.

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