The social costs

Who will pay for failure of Tilaiya power project?

Not enough is still there in the public domain to explain what lies behind the decision by Reliance Power to walk out of the vast Tilaiya Ultra Mega Power Project (UMPP) in Jharkhand. What is certain is that the company has turned its back on one of the three 4,000 megawatt power projects that it won with great fanfare in 2009. The controversial UMPP programme, initiated by the United Progressive Alliance, envisioned 16 such giant plants across India. Eventually only four were awarded. Now there are just three – two with Reliance Power, and one with the Tatas. And those too have been critically examined.  But at least Mundra is running, and Sasan too is operational. The fourth is still tied up in red tape. The exit from Tilaiya underlines the problems inherent in the UMPP programme – which was supposed to solve clearance issues, but obviously did not.

Reliance Power can justifiably point to the fact that, while land acquisition was supposed to start in 2009, the Jharkhand state government delayed five long years. A huge 17,000 acres is due to be acquired – once again giving rise to the question as to whether this is really the optimal size, given the political constraints on land acquisition. Be that as it may, the state government also can justifiably point out that it has already allotted 470 acres in Hazaribagh district to the UMPP (even though the company says that it has not been given possession of even one acre of land so far), and another 1,220 acres are on their way. The payment for the 1,220 acres was due to be submitted by Reliance Power on May 15.  

Others, too, have suffered. The UMPP had signed power purchase agreements with 18 entities in 10 states. Those buyers will now be left with worthless business plans. This is not the first time that a company has walked out of a public-private partnership project when push came to shove.  But the point is simple: whether the fault is the company’s or possibly the state government’s, there should be a cost. The social cost to reneging on responsibilities here was considerable, and it should not go unnoticed. Overall, it is worth noting that the National Democratic Alliance, while resetting the Centre’s approach to public-private partnerships, should notice that even assurances that clearances will be in place may sometimes be difficult to follow through on — and should build that into its strategy.