UP govt cancels 7,040 Mw of stalled power projects

Govt to encash the bank guarantee for these projects worth up to Rs 350 cr

The BJP led Uttar Pradesh government cancelled power purchase agreement (PPAs) with seven coal based power projects totaling 7040 MW which failed to meet their commissioning targets. These projects were awarded through MoU route to various players such as Lanco, Bajaj Energy, Welspun Energy and Unitech Machines etc. during the BSP regime in 2011.

In a notice issued to these companies, the government has also communicated that it will encash the bank guarantee for these projects which totals up to approximately Rs 350 crore.Business Standard has reviewed the notice. 

“The issuance of this termination notice has been occasioned because you have failed to duly perform and obtain long term coal linkage from Standing Linkage Committee, Government of India, despite extensions from the UP government, third and last of which expired on March 31, 2017,” said the notice. The notice comes at a time when the Centre has announced a revised coal linkage policy which would benefit languishing projects.

While some projects also failed to acquire land, Bajaj Energy clarified that they had given up the Bargarh power project in 2013 due to land issue and intimated the state government and the Stock Exchange. "The Bargarh, Allahabad project was given up by us with a proposal to take it to Lalitpur, Bundelkhand as a phase 2 to the current, running power plant. Hence the termination notice is not relevant ," said the company spokesperson.

Lanco Infratech’ spokesperson did not respond and Welspun could not be reached.

Recently, the Uttar Pradesh government also cancelled long term PPAs of total 3800 MW as they were costly as compared to current spot market prices. These were 15 year power supply contracts with Jindal Power, JP-Nigeri, Lanco, Adani Power, GMR and JSW.