No plan to sell Sasan power project: Reliance Power CEO K Rajagopal

Reliance Power cited impairment, higher finance costs, and lower income as the reasons for a Q4 loss of Rs 3,558.51 crore. While its Sasan Ultra Mega Power Project (UMPP) is operating above the optimum level, Tilaiya and Krishnapatnam have been terminated. In an interview to Shreya Jai, CEO K Rajagopal talks about the ongoing cases in several states. Edited excerpts:

What is the status of shifting of a unit of gas-based Samalkot power project in Andhra Pradesh to Bangladesh? 

Module 1 of Samalkot will be deployed in Phase I of Bangladesh Project being developed at Meghanaghat near Dhaka. We expect to commence construction in the next six to nine months. Module 1 equipment supply to Bangladesh will commence thereafter. 

What is the status of the sale of other two units at Samalkot? 

There are two possible resolutions for the two units. These could be deployed in Bangladesh as part of Phase II development pursuant to an MoU, which envisages 3,000-Mw combined cycle gas-based power capacity to be added in a phased manner. In parallel, we have reached an understanding with the US-EXIM to initiate marketing arrangements for sale of equipment for Module 2 and 3 in global markets. With US-EXIM’s network and reach, these sale efforts will receive further boost. 

Has Jharkhand paid the full amount for buying the Tilaiya UMPP special purpose vehicle?

We have received full amount for buying the SPV from the procurers (Rs 113 crore) and we have also received all performance bank guarantees worth Rs 600 crore. Bank guarantee towards captive coal block development, worth Rs 208.16 crore, also stands released and returned by the coal ministry. With this, Tilaiya UMPP stands fully closed. 

 What is the status of Krishnapatnam UMPP?

The PPA stands terminated under the specified clause. The share purchase agreement signed at the time of acquiring the special purpose vehicle of Krishnapatnam from Power Finance Corporation, provides for buyback of SPV by PFC or entity identified by PFC, at a price at which it was acquired by Reliance Power from PFC. We had approached PFC for buyback of SPV and had requested it to call for a procurers' meeting to discuss the SPV transfer.

In parallel, Reliance Power has filed a petition in CERC, requesting it to decide on appropriate forum (CERC itself or arbitration) to adjudicate on dispute between R-Power and procurers with regard to legal validity of the termination notice issued by procurers.  

Is the company planning to sell Sasan UMPP to PFC or to any private company? 

There is no plan to sell Sasan UMPP to PFC or any private company.

Given the tepid power demand and lack of long-term PPAs by states, what is your opinion on the power sector growth, in terms of PLF and fresh investment? 

Fresh capacity addition plans, especially by the private sector, have practically come to a halt. Indian economy is expected to grow at 7-7.5% over 2019-20. If the growth momentum continues and coal availability improves, we expect PLF levels should improve from the current industry average of 60 per cent. However, investment cycle will take some more time of 2-3 years to pick-up.