| SHADOW OVER USE
New Delhi, Aug. 17: Reliance Power unduly gained over Rs 29,000 crore by diverting surplus coal from mines assigned to its Sasan power project, the CAG said today, demanding a review of the decision to give a third coal mine to the project.
The Comptroller and Auditor General of India in its audit report tabled in Parliament said the post-bid concession of allowing RPL to use excess coal from Sasan project mines in its other projects “not only vitiated the bidding process but also resulted in undue benefit” to the Anil Ambani-led firm.
The auditor questioned why a third mine was allocated to the Sasan project by snatching it from NTPC, when it was not established that two previously earmarked mines would be insufficient to generate 3,960MW of power.
“Audit has estimated the financial benefit that will accrue to the project developer on the basis of comparison of tariff of Sasan project (Rs 1.196/unit) with that of Chitrangi (Rs 2.45-3.702 per unit). The overall financial benefit to Reliance Power due to the difference in tariff works out to Rs 29,033 crore with a net present value of Rs 11,852 crore,’’ the report said.
RPL had won the Sasan project in Madhya Pradesh quoting a power tariff of Rs 1.196 per unit in 2006. It got Chitrangi project, to which Sasan coal is being diverted, by bidding a tariff of Rs 2.45-3.702 per unit.
Reacting to the CAG report, Reliance Power (RPL) said, “Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure” and claimed no condition was violated “as the bid documents gave the right to the government to permit use of surplus coal”.
The power ministry said the allocation of additional blocks and use of coal by other RPL projects had been approved by the empowered ministerial panel after seeking the opinion of the Attorney General of India.
It said the Delhi high court had dismissed the petition filed by Tata Power challenging the diversion of coal to other projects, and an appeal against the order is pending with the Supreme Court.
“There is no illegality in coal block allocation. It is an open book. It is transparent. I am not part of any value judgement at this stage. Ultimately it is a report given by the CAG. It is not a final finding. It will go before the Public Accounts Committee. It will go before Parliament,” power minister Veerappa Moily said.
“The CAG was informed of the Attorney General’s decision, not that anything was withheld and all the relevant papers were placed before the CAG, and they should have considered it. They have not referred to the Attorney General’s opinion,” he said.
Reliance Power CEO J.P. Chalasani said in a statement, “The CAG calculations are erroneous, and there is no undue benefit to Reliance Power as the power from surplus coal is being sold on tariff-based competitive bidding basis.”
Chalasani said the CAG had quantified the benefit to Reliance Power on the basis of differential tariff between the Sasan and Chitrangi projects.
He said: “No two projects can ever have the same tariff even if the coal source is the same, and even if the project is coming in the same location as an expansion.”
“The decision of permitting surplus coal for power generation has been ratified by the empowered group of ministers on two separate occasions (once in 2008 and again in 2012),” the company added.