A proposed Rs 150 billion expansion of Rajasthan’s Chhabra Thermal Power Plant by NTPC is unlikely to proceed, with regulatory records indicating that the Memorandum of Understanding (MoU) between NTPC and Rajasthan Rajya Vidyut Utpadan Nigam Limited (RVUNL) has been reviewed and is “likely to be cancelled due to persisting critical issues”. The development casts uncertainty over plans to add 1,320 MW of coal-based capacity through two units of 660 MW each at one of Rajasthan’s key thermal power facilities. It also reflects growing regulatory reluctance to treat intent-based agreements as assured capacity in power sector planning. The status of the Chhabra expansion was discussed during deliberations of the Energy Assessment Committee in August 2025, when the committee examined whether projects supported only by MoUs with central public sector undertakings could be considered firm capacity under resource adequacy assessments. RVUNL informed the committee that such projects remain at an early stage and are affected by unresolved regulatory approvals, fuel transfer arrangements and coal logistics, making their execution uncertain. Following these submissions, the committee concluded that MoU-based projects should not be automatically treated as tied-up capacity and must be assessed individually. In the case of Chhabra, the committee noted that the MoU with NTPC had been reviewed and was likely to be cancelled due to unresolved issues. Regulatory documents emphasise that an MoU represents only a preliminary expression of intent between a state government and public sector undertakings. It does not constitute a binding commitment on project commissioning, tariffs or assured capacity availability for distribution companies. The viability of such projects depends on techno-economic studies, regulatory approvals, coal logistics and power purchase agreements. Treating MoUs as firm capacity, the documents warn, is neither technically sound nor aligned with prudent resource planning norms. Located in Rajasthan’s Baran district, the Chhabra Thermal Power Plant currently has an installed capacity of 2,320 MW, comprising four units of 250 MW and two units of 660 MW, operated by RVUNL. The proposed NTPC-led expansion was expected to significantly strengthen Rajasthan’s baseload power portfolio, but the project has remained at the planning stage for several years. People familiar with the matter said negotiations were repeatedly hindered by disagreements over ownership and control of the proposed joint venture, with NTPC seeking management control. Uncertainty over coal linkage, fuel transfer mechanisms and evolving environmental compliance requirements further complicated the project’s financial viability. Without clarity on fuel security and governance, committing capital on this scale became increasingly difficult, according to a senior official. Queries sent to NTPC regarding the status of the Chhabra MoU and the regulatory concerns did not receive a response. The likely cancellation of the Chhabra project comes as Rajasthan reassesses its thermal power strategy while accelerating its renewable energy push. Although the state has approved additional coal-based capacity in recent years, regulators are tightening scrutiny of projects lacking execution certainty. Officials noted that assumptions about future coal capacity significantly influence long-term power procurement planning and investment signals, and counting projects that may not materialise could distort resource adequacy assessments. Originally planned as a state government-owned project under RVUNL, the expansion was later considered as a joint venture with NTPC due to financial constraints. Experts suggest that uncertainty surrounding public sector projects, combined with planned retirement of around 1.3 GW of coal capacity over the next five years and limited new investments, could reduce the share of public sector generation in Rajasthan. This shift may also indicate the state government’s intent to create a more favourable environment for private investment in the power sector.