Land acquisition issues force Reliance to shut down its Tilaiya power project

Once again, land acquisition issue has provided a stumbling block to a power plant in Jharkhand. As per a news report by The Economic Times, Anil Ambani-led Reliance Power today has terminated the contract for Rs 36,000 crore Tilaiya mega power project in Jharkhand over inordinate delays in land acquisition.

The ET report further adds, 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 . However, it couldn’t start work on the project as the state government had not provided the required land even after more than five years.

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 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.

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

(Image: reuters)