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The Central Electricity Authority’s fact-finding committee report on Jaiprakash Power Ventures’ 1,000 MW Karcham Wangto hydro power project in Himachal Pradesh states that the developer violated norms to increase the installed capacity by 200 MW.
The report, expected to be considered on Friday by the apex body of the CEA, could create a hurdle for the closure of ₹12,500 crore deal where Anil Ambani’s Reliance Power is to buy out all hydro power assets of Jaiprakash Power Ventures (JPVL).
The deal was particularly important for the debt-laden Jaypee Group, which is selling assets to reduce its loans. With over ₹56,000 crore of group level debt, Jaypee Group was trying to trim its debt by ₹15,000 crore in the current fiscal.
While both Reliance Power and Jaypee declined to comment, sources associated with the two companies said Reliance Power is closely watching the developments.
According to the fact-finding committee report seen by Business Line , JPVL has increased capacity at Karcham Wangto to 1,200 MW against the 1,000 MW techno-economic clearance (TEC) given to the project by the CEA.
During the process of applying for TEC, Jaypee Group informed the CEA that though the project could have an overall size of 1,725 MW, it would be restricted to 1,000 MW due to tunnelling problems in the region.
It had been decided that the project would have four units of 250 MW each. However, during the execution of the project, it noted violations of the approvals given.
The committee found that each of the four transformers have been designed for 300 MW capacity and also that continuous generation at 1,200 MW may stress civil structure beyond permissible limits endangering project safety.
The options available are either to stop the whole project or reduce generation to 1,100 MW.
According to industry sources, reduction in generation would lead to disallowance of proportionate cost of project, which would reduce tariff to ₹3.75 a unit from ₹4 a unit. Meanwhile, sources in the know of the development said JPVL has withdrawn its application before the Central Electricity Regulatory Commission for interim tariff of the electricity generated from Karcham Wangto. However, the company is expected to file a new application soon.
After the deal was announced on July 28, JPVL shares closed 3.17 per cent higher on the BSE at ₹19.55, Jaiprakash Associates ended 2.95 per cent higher at ₹61.10, while Reliance Power closed 3.47 per cent higher at ₹94.
On Thursday, Jaiprakash Power’s shares closed 5.32 per cent higher on the BSE at ₹14.85, Jaiprakash Associates ended 3.22 per cent higher at ₹35.25 while Reliance Power ended 4.41 per cent higher at ₹74.60.
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