CAG report: RPower says had EGoM nod for use of surplus coal

After a Comptroller and Auditor General (CAG) report on Friday said Reliance Power got undue benefits worth Rs 29,033 crore on the government allowing use of surplus coal from blocks allotted to Sasan power plant for its other projects, the company has jumped to its defence.

The Anil Ambani-led firm said a top inter-ministerial panel in 2008 had taken the decision to allow the company to use surplus coal from the mines and its review has already been implemented.

"The decision of permitting use of Surplus Coal for power generation has been ratified by EGoM on two separate occasions (once in 2008 and again in 2012)," Reliance Power said in a statement.

Based on Attorney General's opinion, the EGoM on UMPPs has affirmed in April 2012 that the decision to permit usage of surplus coal from Sasan UMPP is a well considered decision.

"Thus, CAG's recommendation of reviewing this decision has already been implemented," the statement said.

Shares of Reliance Power dropped 5.6 per cent after CAG tabled the report in Parliament, closing the week at Rs 87.70 on the Bombay Stock Exchange.

An Empowered Group of Ministers (EGOM), headed by the then Finance Minister Pranab Mukherjee, had permitted the company to divert excess coal from the three mines - Moher, Moher Amlohri and Chhatrasal - to another project, Chitrangi in the state.

"Reliance Power had no role in allotment of coal reserves to Sasan UMPP - Coal Blocks allotted months before bid submission in December 2006," the company said.

The CAG in its report said subsequent to the award of the 4,000 MW Sasan ultra mega power project to Reliance Power, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group's Chitrangi project in Madhya Pradesh.

CAG said the permission to use of excess coal from Moher, Moher Amlohri and Chhatrasal blocks allocated to Reliance Power's Sasan power project after its award not only vitiated the bidding process but also resulted in undue benefit to the company.

"There is no vitiation of bid conditions as the bid documents gave the right to government to permit use of surplus coal," Reliance Power said.

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 the government, the company statement said.

The company claims to have adopted latest techniques possible to excavate more coal from the allotted mines.

"Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure, conventional mining methods would result in this coal remaining underground," it added.

The CAG said to ensure fair play, a level playground and transparency of the bidding process for future developers to derive comfort in government action, the allocation of third coal block (Chhatrasal) should be appropriately reviewed.

With inputs from PTI