‘Reliance Power unduly gained over Rs 29,000 crore'

Published: 18th August 2012 10:09 AM  |   Last Updated: 18th August 2012 12:48 PM   |  A+A-

In a scathing report that completely undermines and questions the entire bidding process of awarding ultra mega power projects (UMPPs) to private project developers, the CAG has contended that post-bid concessions extended to Reliance Power Ltd in Sasan UMPP resulted in financial benefits to the tune of Rs 29,033 crore to the Anil Ambani-led power company.

The audit report on UMPPs Under Special Purpose Vehicles for the year ended March 2012, not only revealed that rules were bent and norms were diluted right from the stage of selection of bid process management consultant to evaluation of bids and allocation of coal but also showed there were gross inadequacies and opaqueness in the whole process.

“Permission for use of excess coal by RPL from the three coal blocks allocated to Sasan UMPP after its award not only vitiated the bidding process but also resulted in undue benefit to RPL,” the report said.

At the heart of the report is the recommendation by the Empowered Group of Ministers (EGoM) on allowing Reliance Power to use the surplus coal from the three coal blocks-Moher, Moher-Amlohri Extension and Chhatrasal-allotted to Sasan UMPP for its other projects, especially Chitrangi in Madhya Pradesh, where power sold was through tariff-based bidding.

In its defence, Reliance Power said CAG’s observations do not completely take into account the extant policy and precedents, India’s looming coal shortage, and national interest to augment domestic coal production, which were the basis of the decision taken by EGoM.

In September 2006, the government had originally allocated Moher and Moher-Amlohri Extension coal blocks for the Sasan UMPP to meet its raw material requirements. The allocation was made based on geological reserves and as the production from the two blocks was considered insufficient by Power Ministry, Chhatrasal block was also allotted after de-allocating the same from NTPC prior to opening of financial bids for Sasan UMPP.  At the time of allocation of coal blocks, data regarding actual availability of coal for the project was not available in the absence of mining plan.

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