CoalMin issues notice to R-Power on Tilaiya UMPP

Asks Reliance to pay damages for not developing the allotted coal block

The Union ministry of coal (MoC) has issued a showcause notice to Reliance Power (R-Power) for the delay in developing two coal blocks associated with its 4,000-Mw Ultra Mega Power Project (UMPP) at Tilaiya, Jharkhand, awarded to it in 2009.

While R-Power relinquished the project in 2015, citing regulatory delays, the coal ministry said the coal block development was a separate project and the company is supposed to pay damages for delaying it.

The UMPP came with the Kerandari coal block in the North Karanpura coal fields. The mine has annual production capacity of 40 million tonnes.

“The Tilaiya UMPP project has received a huge setback, rendering the country deprived of power to be produced from the said project. Hence, RPL cannot be absolved of its responsibility of paying damages for non-achievement of milestones set for development of the Kerandari B&C block,” goes the notice issued by the ministry, posted on its website.

It adds that the issue was being placed before an inter-miniterial group, for recommendations.

R-Power said the notice was yet to be received by them. And, that the ministry had sent a similar notice to it in December 2013, and a detailed reply was given in January 2014. There had been no response from the ministry in the next two and years, till now, it stated.

“A detailed response to the new showcause notice will be submitted in due course,” said R-Power. The ministry has asked the company to respond in 15 days, failing which “appropriate action would be taken”.

Tilaiya was one of three UMPPs with the company.

R-Power had announced in April 2015 that its special purpose vehicle (SPV) for the project, Jharkhand Integrated Power Ltd, had terminated the power purchase agreement with 18 entities in 10 states on land acquisition concerns. Beside Jharkhand, Gujarat, Delhi, Punjab and Haryana were among those with which the SPV had signed 25-year contracts for power supply. The UMPP was awarded to R-Power for a levelised Rs 1.77 a unit in a 2008 bidding which saw participation from NTPC, Lanco Infratech, Jindal Power and Sterlite Energy. The company had earlier planned for capital expenditure of Rs 36,000 crore on the project.