NEW DELHI: Anil Ambani ’s Reliance Power on Tuesday said its subsidiary Jharkhand Integrated Power Ltd (JIPL) has terminated the power purchase agreement (PPA) for the proposed 3,960 mw Tilaiya ultra-mega power project, a move top power ministry officials described as “sudden and unilateral”.

A company statement cited delay of more than five years in land acquisition by the state government for the power plant, captive coal blocks and related infrastructure as the reason. This is being interpreted as the company finding the project unviable as the PPA required procurers to hand over land and other clearances by February 2010.

JIPL, a special purpose vehicle created for implementing the project, had signed PPA with 18 power offtakers in 10 states for 25 years. It had won the project in August 2009 through tariff-based bidding by quoting a levelised rate of Rs 1.77 per unit. But the project has yet to get off the ground.

“In spite of 25 review meetings and extensive and continuous follow-ups with the state government, the required land is yet to be made available,” the company said.

“More than 17,000 acres are required for the project. Even the forest land in the power station area, for which Stage-II forest clearance was accorded by the central government in November 2010, has not been handed over to JIPL till now. As regards the coal block, the land acquisition process is yet to get initiated, for which the application was submitted way back in February 2009,” the company said.

But ministry officials said as late as on April 17, the state government made specific time-bound commitment to hand over land at the joint monitoring committee meeting in Ranchi.

Officials said the company has already moved the central power regulator for revision of tariff in the PPA. “The procurer states will need to examine the matter in the light of the PPA and take necessary action,” an official said.

But the company said, “Even after relentlessly pursuing the project development for nearly five-and-a-half years, due to procurers' failure to provide land for the project, execution time-frame continues to remain uncertain.” It added that the project could not be completed before 2023-24, going by the present estimate of the land handover process.

The termination of the project will reduce Reliance Power’s future capital expenditure by Rs 36,000 crore. The company said it would focus on green energy projects in line with the government’s emphasis.