JOIN USReliance Power Limited (RPL) was unduly benefited by Rs 29,033 crore with a net present value of Rs 11,852 crore as the government allowed it to divert surplus coal blocks, allocated for the Sasan power plant project in Madhya Pradesh, to its other project, according to the CAG.
Anil Ambani's RPL had won the Sasan project quoting a power tariff of Rs 1.196 per unit in 2006. The coal blocks allocated for the Sasan project was diverted to RPL’s another power project at Chitrangi tehsil in the vicinity of Moher, Moher-Amlohri Extension and Chhatrasal mines.
“The permission to use surplus coal in other projects of the developer (RPL) vitiated the sanctity of the bidding process since it amounts to post-bid concessions to the developer having significant financial implication,” the audit watchdog said in its report tabled in Parliament on Friday.
The CAG questioned why a third mine was allocated to the Sasan project by taking it from state-owned National Thermal Power Corporation, when it was not established that two previously earmarked mines would be insufficient to generate 3,960 MW of power. It recommended that the allocation of the third coal block (Chhatrasal) should be “appropriately” reviewed to ensure fair play, a level playground and transparency of the bidding process for future developers.
“Since the developer (RPL) had committed that he would be able to source 20 million tonne from the two blocks there would be adequate coal to feed the Sasan UMPP (Ultra Mega Power Project),” the CAG report noted. Reacting to the report, the RPL said no condition was violated as the bid documents gave the right to the government to permit use of surplus coal. “Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure,” it added.
The RPL also pointed out that the decision of permitting use of surplus coal for power generation has been ratified by EGoM on two separate occasions—once in 2008 and then in 2012. It claimed CAG’s recommendations of reviewing the decision on surplus coal permission to Sasan UMPP and allocation of coal blocks to Sasan UMPP “has already been implemented by Government of India.”
The audit watchdog also observed gaps in the bid evaluation criteria, pointing out that the RPL was awarded power projects on its claims of having experience of developing projects based on additions to the fixed assets, despite the fact that the only capital cost of projects commissioned during the last 10 years was eligible to be counted for project experience.
“Audit observations do not completely take into account the extant policy and precedents,” the RPL said.