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The Anil Ambani-promoted Reliance Power Ltd’s (RPL) 3,960MW Sasan ultra-mega power project (UMPP) may only commission 50% of its initial planned capacity of 1,320MW by 2012, according to a government review. If this happens, it will be a setback to the government’s effort to enhance the country’s power generation capacity to meet growing demand for power through the setting up of UMPPs—Sasan in Madhya Pradesh was among the first batch of UMPPs awarded by the government in 2007.

In a review, it was found that this delay was due to late land acquisition and handover to RPL. Around 40% of the 3,280 acres required for the project is yet to be acquired. “We had a review meeting recently according to which only one unit is expected to be commissioned in the 11th Plan. Reliance has sufficient land for the project. More than 60% of land is there. They should commission both units within 2012,” said H.S. Brahma, Union power secretary. However, RPL remained hopeful of meeting the deadline.

“As per the original schedule in the bid and incorporated in the PPA (power purchase agreement), the first unit is scheduled to be commissioned by May 2013 and the last unit by March 2016. Subsequently, subject to land availability and other clearances we have agreed to advance the commissioning of two units in the 11th Plan period (2007-12) and the entire project by March 2013, which is three years ahead of the original schedule. Though there have been significant delays in acquisition and handing over of land and also the forest clearance for the coal mine, we are still working towards commissioning two units in the 11th Plan period and we are confident of the same,” an RPL spokesperson said in an email reply.

Expectations are that only one unit of 660MW will be commissioned by 2012 against a target of two units having a total capacity of 1,320MW. The project when fully commissioned will have six units of 660MW each, taking the total project capacity to 3,960MW.

“According to the power purchase agreement signed by the developer and the procurers, two units of 660MW were to be scheduled in the 11th Plan. As per the latest estimate, only one unit is expected in the 11th plan,” said a senior official at Central Electricity Authority (CEA), India’s apex power sector planning body, who did not want to be identified.

According to the original PPA signed for the project, the two units were to be commissioned by 2013. However, after the power ministry pressed for an early commissioning, a revised PPA was signed with 14 utilities in seven states—Madhya Pradesh, Punjab, Haryana, Uttar Pradesh, New Delhi, Rajasthan, Uttarakhand, according to which the first unit was to be commissioned by 31 December 2011 and the second unit by 31 March 2012.

Sasan Power Ltd, the special purpose vehicle created for the project, was transferred to RPL on 7 August 2007 after the original winning bidder was disqualified and the project was awarded to RPL following a competitive tariff-based bidding. Mint had reported on 25 January 2008 about the project running into issues related to the acquisition and allocation of land on account of forest and environment clearance delays.

“On the face of it, this incident appears as an aberration and as such does not reflect the overall philosophy of the government in terms of opening up critical sectors such as power to genuine players. Given the current environment, it is imperative for approval processes such as these to undergo the requisite levels of due diligence,” said Monish Chatrath, executive director at consultancy firm Mazars India.

The project is expected to involve an investment of Rs19,400 crore and will supply electricity at a tariff of Rs1.196 per unit. The main plant equipment order has been placed with China’s Shanghai Electric. Currently, India has a power generation capacity of 154,000MW and expects to add 62,000MW by 2012.


Source - Mint