Reliance Power

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Reliance Power, also known as RPower, states on its website that it is "part of the Reliance Anil Dhirubhai Ambani Group and is established to develop, construct and operate power projects domestically and internationally. The Company on its own and through subsidiaries is currently developing 16 large and medium sized power projects with a combined planned installed capacity of 33,780 MW, one of the largest portfolios of power generation assets under development in India."[1]

In 2009, Reliance Power was approved for the Tilaiya Ultra Mega Power Project in Jharkhand, a third such ultra mega coal plant project obtained by the company, after the Sasan Ultra Mega Power Project in Madhya Pradesh and the Krishnapatnam Ultra Mega Power Project in Andhra Pradesh.[2]

Mine for Tilaiya Project approved

In November 2010, the India Coal Ministry approved a mining plan submitted by RPower, granting initial clearance for mining coal from Kerandari B and C coal blocks in Orissa to feed the company's proposed Rs.20,000 Tilaiya Ultra Mega Power Project (UMPP). The coal mines can support 10,000 MW of power generation. It is estimated to be the largest coal block in India and among the top three in the world, with reserves in excess of 1.2 billion tons. RPower is understood to have obtained the initial environment clearance as well, and has commenced land acquisition process for developing the mines, which have estimated coal reserves of 1.2 billion tons allotted for the Tilaiya UMPP. The plan envisages an annual coal production of 40 million tons for 30 years.[2]

The Coal Ministry said that the company would utilize 16 million tons per annum of coal exclusively for the Tilaiya UMPP and the balance 24 million tons would be used or disposed off as per the conditions stipulated in the allocation letter. The mines are located around 30 kilometer from the existing line of Indian Railways, and could supply coal to other group companies.[2] The permission has come even as the government, TATA Power, and RPower are locked in a legal battle in the Supreme Court over permission to divert coal from the Sasan Ultra Mega Power Project to another RPower project.[3]

Coal Plants

As of May 2011, Reliance Power reported the following projects under development, under construction, or operating:[4]

Coal plants cancelled or on hold

Shahpur Thermal Power Project

In September 2011, it was reported that Reliance Power wants to scrap a proposed 4,000 megawatts (MW) power project at Shahpur in Maharashtra’s Raigad district "because of the state government’s inability to complete land acquisition within the legally stipulated time frame." The Shahpur project, being developed by R-Power’s subsidiary, Maharashtra Energy Generation Ltd, has two parts— 1,200MW would be based on imported coal, and the rest on gas.

The state government issued a notification to acquire 2,700 acres of land in Shahpur and six adjoining villages in November 2007. The process had to be completed in three years under the state’s land acquisition law, which it hasn’t done. R-Power sent a letter to district collector H.K. Jawale on 3 September, saying it wouldn’t be able to pursue the project in view of the government’s failure to meet the land acquisition deadline. It also demanded the return of Rs. 45 crore that had been deposited with the state government to start the land acquisition process. Jawale had recommended that the land acquisition be scrapped on 3 August, as R-Power executives had promised in May 2010 to offer a resettlement package for villagers that would be displaced by the plant, but no such undertaking was provided by R-Power despite a reminder in June 2011, Jawale said.

In addition, R-Power had planned to source coal for its project from its mine in Indonesia, but fuel produced in that country is set to become more expensive as Indonesia recently pegged prices to prevailing international rates.

Maharashtra is among India’s most industrialized states, and is seeking to make itself an attractive investment destination for manufacturers to maintain its primacy in the sector.[5]

Krishnapatnam Ultra Mega Power Project

In June 2011, Reliance Power stopped work at its Krishnapatnam Ultra Mega Power Project, citing a hike in the cost of Indonesian coal that the project is to run on. Reliance Power claims that the new Indonesian Coal Price Regulation will push up the coal cost, and the company will not be able to meet the conditions set by the lenders, affecting its ability to meet the project cash flow requirements. The stoppage comes even as work on the associated infrastructure for the project is ongoing, including Power Grid Corporation's transmission link (Krishnapatnam-Nellore line for start-up power) that is scheduled to come up by November 2012.[6]

Carbon credits

As of July 2011, five "high-efficiency" coal power plants, including Sasan and Krishnapatnam, were registered under the UN's Clean Development Mechanism -- four in India and one in China -- meaning they are all eligible to earn certified emissions reductions (CERs) that they can sell. The five registered power projects involve two from Reliance Power totalling 8,000 MW, two projects totalling 2,640 MW from Adani Power and a 2,000 MW ultra-supercritical plant by Shenergy in China.

According to U.N. data, the five projects are eligible to receive a total of 68.2 million CERs over a 10-year crediting period. That is worth 661 million euros ($919 million) based on current prices of CERs traded on the European Climate Exchange of 9.70 euros.

Reliance's Krishnapatnam Ultra Mega Power Project will receive 12.3 million CERs and the firm's other 4,000 MW plant, Sasan Ultra Mega Power Project in Madhya Pradesh, will receive 22.5 million. Total carbon dioxide emissions from the five projects, based on data from project design documents, over the 10-year crediting period is 673 million tonnes.[7]

Reliance Power was also seeking to earn almost Rs 2,000 crore in 10 years by registering its 4,000 MW Tilaiya Ultra Mega Power Project for carbon credits, in the company's goal to earn Rs 5,000 crore from carbon credits from the CDM with its three ultra mega power projects of 4,000 MW.[8]

On Oct. 3, 2011, Reliance Power said its 3,960 MW Tilaiya Ultra Mega Power Project in Jharkhand had received approval for carbon credits from the United Nations Framework Convention on Climate Change (UNFCCC). The plant would earn Rs 2,000 crore by trading carbon credits during the first 10 years of its operations. CEO JP Chalasani said, "This is the third project in a row which we have got regarding the carbon credits. The first one was Sasan followed by Krishnapatnam and now the Tilaiya. All of them put together would be producing about 5.6 million CERs per year."[9]

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