Reliance power has announced withdrawal from one of the three Ultra Mega Power Projects awarded to it. The company is exiting from the exiting from the Jharkhand’s Tilaiya UMPP after the five and a half years of startup work.
The exit of Reliance is a big set back of the UMPP projects aimed to generate nearly 40000 MW of electricity in ten projects. Among all, only the Sasan project is going healthy because it has a built in Ccoal reserve which may support many years of continuous production.
Tata power’s Mundra project which is one of the ten UMPP, and start operational has reported significant losses due to high cost of imported coal.
Tilaiya is the third UPPP awarded to Reliance; others are Sasan and Krishnapatnam. The Sasan Project in Madhya Pradesh now remains the fully operational model among the UMPPs which was an ace example for PPP model in the country’s energy sector.
Reliance has cited land acquisition problems and environmental clearance issues while exiting the UMPP. The exit decision by the company may initiate actions from various stake holders of the project including the states which have signed power purchase agreements with Reliance. Reasons cited by the company are also solvable and it shows that Reliance decision may be an expression of desperation.