Reliance Power refutes CAG on excess coal benefit

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SME Times News Bureau | 18 Aug, 2012
The permission to Reliance Power to use excess coal from three blocks allocated to Sasan Ultra Mega Power Project resulted in an undue benefit, says India's official auditor. But the company refuted the allegation and denied any wrongdoing.

The Comptroller and Auditor General's (CAG) report on Ultra Mega Power Projects for the year ended March 31, 2012, was tabled in parliament Friday.

The coal ministry had permitted Reliance Power to utilize surplus coal from three mines of Sasan project for their another project in Madhya Pradesh, which as per the audit report vitiated the bidding process.

Audit has estimated the financial benefit that will accrue to the project developer by comparing the tariff of the Sasan project with that of Chitrangi for Madhya Pradesh and Uttar Pradesh.

"The overall financial benefit to Reliance Power due to impact of difference in tariff works out Rs.29,033 crore with a net present value of Rs.11,852 crore."

Reliance Power chief executive J.P. Chalasani countered the report and said there were several inconsistencies in its observations as in many occasions in the past and added there was no diversion of surplus coal, as alleged.

"Coal blocks were allocated for Sasan even before the bidding process," he said, while alluding it did not matter who the developer was. The empowered group of ministers had also ratified the decision on two occasions, Chalasani added.

"We made at least two representations (to the official auditor) on this in the past," he said and added even the government on many instances did not concur with the manner in which the auditor had arrived at its conclusions.

In another refutation, Reliance Power's top executive said the audit report arrived at its conclusion by comparing two projects. But the ground reality is: No two power projects can have the same tariff, he said.

The report also made some recommendations. To ensure fair play, a level play field and transparency of bidding process for future developers, the allocation of the third coal block at Chhatrasal in Madhya Pradesh be appropriately reviewed.