Showcause notice to RPower for delays in developing coal mines

The Coal Ministry has issued show cause notice to Reliance Power asking reasons for delays in developing coal mines allocated for Tilaiya UMPP, which has been relinquished by the company.
"You are hereby called upon to show cause, on each milestone separately...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 BG submitted by you should not be deducted for non-achievement of milestones stipulated for development of coal block," the coal ministry said.
The ministry has given the company 15 days to reply.

"In case no reply is received from your end within 15 days, it would be presumed that your company has no explanation to offer and action, as appropriate, would be taken against your company," the ministry said in the notice to the company.
Reliance Power/JIPL (Jharkhand Integrated Power Ltd) was allocated Kerandari B & C coal block for using coal captively in the Tilaiya Ultra Mega Power Porject (UMPP), however, Reliance Power has relinquished Tilaiya UMPP project, it said.
'Agree to Terminate' option was exercised and accepted voluntarily by RPL and the Procurers. This act, though authorised, is extraneous to the course of development of coal block, the notice said.

"Accordingly, Tilaiya UMPP project has received a huge setback rendering the country deprived of power to be produced from the said project. Hence, RPL/JIPL cannot be absolved of its responsibility of paying damages for non-achievement of milestones set for development of Kerandari B&C coal block," it said.

It has been decided to place the matter of deduction of bank guarantee (BG) submitted by Reliance Power for Kerandari B&C coal block before the Inter-Ministerial Group for making recommendations to the Government.
In 2007 the coal ministry had allocated Kerandari B & C coal block to JIPL, a subsidiary of Power Finance Corporation (PFC) subject to certain conditions.

Further, Reliance Power acquired JIPL from PFC in 2009 after emerging as the lowest bidder in the International Competitive Bidding process for Tilaiya UMPP. Subsequently, RPL communicated that it had terminated the PPA and relinquished Tiliaya UMPP.
(REOPENS DCM 59)
Reacting to the Coal Ministry's show cause notice, Reliance Power said in a statement, "A show cause notice...Has been uploaded by Ministry of Coal (MoC) with regard to the Kerendari B&C coal block allocated to Jharkhand Integrated Power Ltd (JIPL), a wholly owned subsidiary of Reliance Power Ltd, for the Tilaiya Ultra Mega Power Project (UMPP)."
"The same has not been received by Reliance Power Ltd till now," it said.

Earlier in December 2013, the Coal Ministry had sent a similar show cause notice and the company gave a detailed response in January 2014. There has been no response from the ministry for the last two-and-half years, it said.
A detailed response to the new show cause notice will be submitted to ministry in due course, the statement said.
Reliance Power terminated the PPA for Tilaiya UMPP entered into with 18 procurers vide notice dated April 28, 2015, that is nearly 14 months ago.
"The PPA termination was due to prolonged delay in fulfillment of the procurers' development period obligations in respect of land for power plant and coal mine for more than five and a half years," the statement said.

The procurers, led by lead procurer Jharkhand Urja Vikas Nigam Ltd (JUVNL), have already accepted the termination of the PPA due to procurers' event of default in November 2015, ie nearly eight months ago, it said.