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Angry Haryana sues REL for plant delay

Haryana Govt imposes Rs 200 cr-fine on REL for its failure to meet the deadline in making a thermal power plant operational, reports Nagendar Sharma.
By Nagendar Sharma | Hindustan Times, New Delhi
UPDATED ON FEB 22, 2008 02:21 AM IST

Power-starved Haryana government has imposed damages that could go as high as Rs 200 crore on Anil Ambani-controlled Reliance Energy Limited (REL) for its failure to meet the deadline in making operational a 600 megawatt thermal power plant at Yamunanagar.

The first unit of the thermal power plant was to start generation of 300 MW electricity by November 19 last year. The Haryana government says the company had defaulted on its commitment and was unable to stabilise the unit even three months after the deadline.

The state government wanted the company to make the second unit ready by February 15 for generation of another 300 MW, but it has failed to take off so far.

REL has admitted to "a slight delay" in making the plant operational, but denies having received any communication for payment of damages yet. "All issues with the state government would be sorted out soon", a company spokesman said.

State Chief Minister Bhupinder Hooda along with Power Minister Randeep Surjewala had met top REL officials last week, and had conveyed their displeasure at the unexplained delay.

“Anybody who has violated contractual obligations would have to pay damages, including Reliance. There is a power crisis in the state and the government will not allow private companies to heap miseries on the people," Surjewala told the Hindustan Times.

The minister said the REL had defaulted on both the units, despite full cooperation from the state government for completion of the plant so that electricity generation could be started at the earliest.

A senior official said the company would be supposed to pay Rs 5 crore as damages every week, upto a maximum of Rs 200 crore, based on the agreed percentage for the entire project cost of Rs 2,000 crore.

The company says it has so far not received any letter in this regard from the state. “We are not aware of any such communication from the Haryana government. There has been a slight time over-run in the Yamunanagar plant.. We are in talks with the state and are confident that all issues would be resolved soon," REL spokesman Kamaljeet Rattan said.

The company has described the delay in stabilizing the plant as “teething troubles which were natural with a new project and would be sorted out soon.”

The two sides have also traded charges on the complete shutdown of the plant for the past one week. While the state government officials have called it “unacceptable," REL sources said it was a planned shutdown for repairs, which was made known to the state in advance.

The government has said it did not buy electricity from outside, expecting the REL to honour its assurance on the contract. Many parts of the states including Gurgaon and Faridabad were facing an acute power shortage, a senior official said.

Haryana is struggling to meet a shortage of 1500 MW to fulfill the demand, which has led to power cuts lasting six to eight hours in many parts of the state.

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