Anil Ambani-controlled Reliance Power Ltd (RPL) on Tuesday pulled out of a 3,960-mw ultra-mega power project (UMPP) in Jharkhand’s Tilaiya citing delays in land acquisition, a factor that has become emblematic of several of India’s stalled infrastructure projects.
The decision by RPL on the Rs 36,000-crore project comes at a time when the Narendra Modi-government has vowed to turn India into a manufacturing powerhouse, remove bureaucratic sloth and make the country more investor friendly, critical to catalyse growth across farms and factories.
An unrelenting Opposition has also forced the NDA government on the back-foot on a fresh land acquisition bill, after it failed to get it passed in the first half of the budget session. It faces an uphill task in the Parliament’s ongoing session with Congress chief Sonia Gandhi and vice president Rahul Gandhi leading the charge, stating that the party would not compromise on the proposed “anti-farmer” legislation.
The government has launched a series of initiatives including the signature ‘Make in India’ campaign to turn around India’s image as a preferred investment destination. From land problems to ambiguous tax laws, a barrage of hurdles have kept away private investments, analysts said.
RPL said in a statement that Jharkhand Integrated Power Ltd, a special purpose vehicle which was awarded the project in February 2009, was terminating the agreement as the land for the same is “yet to be made available.”
Tilaiya is a Naxal-infested area, which, in the past, too, has lost several big-ticket infrastructure projects. In April 2011, a Reliance Power executive was killed in a suspected Naxal attack.
“As regards the coal block, the land acquisition process is yet to get initiated, for which the application was submitted in February 2009,” the statement said.
The company said that the decision will reduce the future capital expenditure pipeline — a proxy to measure potential investment — by Rs 36,000 crore.
“Land acquisition being one of the toughest challenges in that area, the project would have run into huge cost overruns,” said Dipesh Dipu, energy, natural resources and infrastructure expert at Hyderabad-based Jenissi Management Consultants.
Government officials said RPL’s decision will jeopardise future energy supplies to 10 states including Jharkhand, Delhi, UP, Punjab, Rajasthan, Haryana, MP, Gujarat, Maharashtra and Bihar.