‘Undue favour’ of Rs 16,000 cr to Anil
21 May 2012 1:46 AM GMT
Even after being indicted by the Comptroller and Auditor General (CAG) for showing undue favour to the tune of nearly Rs 16,000 crore to Reliance Power Limited for the Sasan Ultra Mega Power Project in Madhya Pradesh, the United Progressive Alliance government is going ahead to extend this patronage.
The empowered group of ministers (EGoM) has taken a decision recently to permit the Sasan developer Reliance Power to divert its surplus coal to its nearby Chitrangi power project.
What is surprising is that earlier the Anil Ambani-led Reliance Power had made another plea to the government to divert excess coal of the Tilaiya power project to another project, which had been rejected by the EGoM on the grounds that policy guidelines had to be framed on such matters.
In the presence of the power minister Sushil Kumar Shinde and the coal minister Shri Prakash Jaiswal, the EGoM chairperson Pranab Mukherjee presided over the meeting which took the decision on Reliance Power, wherein it was said that it was Shinde who had recommended the cancellation of one of the allotted coal blocks, Chhtrasaal, and its return to the government.
Since the other two coal blocks would fulfil the entire requirement of the Sasan project, the coal ministry also agreed to the proposal of the power minister to cancel the allotment of the Chhtrasaal coal block to Reliance Power and give it back to Coal India.
Reliance Power requested the government to allow them to divert excess coal of Kerandari B and C coal blocks, which they got for the Tilaiya project, for other projects. In these two blocks, Reliance Power already has excess coal to the tune of more than 400 million tonnes for the next 25 years. The government rejected this request.
Reliance Power claimed that they would produce 96 per cent coal from the reserves of Kerandari and divert an entire river for coal mining.
The UPA government's decision to offer 100 per cent excess coal block, which the CAG has defined as 'undue favour' to the tune of nearly Rs 16,000 crore, is all set to create new controversy for the government.
Earlier in its report, CAG had strongly observed, 'As per the terms and conditions governing the allocation of coal blocks, no coal should be sold, delivered, transferred or disposed off except for the stated captive mining purposes, except with the previous approval of the Central government on case to case basis. Any surplus coal is to be handed over to the local CIL subsidiary or to any person designated at a transfer price to be determined by the government.'
'There is a possibility of the production of surplus coal from the captive coal blocks, if the coal production materialises before the commissioning of the end-use project or if the coal production outpaces production in EUP. There could also be wilful diversion of coal to the black market by an allottee, as in the reported case of Prakash Industries, Allocattee of the Chotiya block in Chattishgarh. The allocation of excess coal and permission to use the surplus coal in other projects of RPL (Sasan) gave undue benefits to RPL over others thereby violating the principle of equity.'
The CAG strongly observed, 'As per as incentives were concerned the allocattees already has had substatial windfall gains on account of substantial difference between the price of coal supplied by CIL and the cost of coal produced through coal blocks allocated for captive mining. Out of 86 coal blocks which were scheduled to produce in the 11th plan period (up to 2010-11) only 26 blocks, including 15 blocks allocated to private sector started production as of 31 march 2011. This would imply some of the allocattes were non-serious about production.'
Bypassing such strong indictment by the CAG, the government has gone ahead by quoting the attorney general Goolam Essaji Vahanvati’s legal opinion, whose role came under scrutiny during the 2G scam. In the corridors of power, he is seen to be close to Reliance officials.
Interestingly, the coal ministry is of the view that in the coal allocation letter or in the bid document there is no such condition of allowing excess coal for other projects. On the special request of Reliance Power, the power minister Sushil Kumar Shinde piloted the EGoM meeting of the Sasan project in October 2008 and used its discretionary power to permit Reliance Power to divert the surplus coal to the Tilaiya power project in the absence of policy guidelines.
The coal ministry recently came out with a policy of surplus coal and uploaded its text on the ministry’s web site, but later on it was removed at the insistence of the Prime Minister’s Office.
According to the attorney general's opinion, the Ultra Mega Power Projects are not concerned with the production and sale of coal, but their mandate is to produce power. But, why such huge amount of excess coal is being allowed to be diverted for another project, where they already have blocks for excess coal, is a matter of curiosity to the investigators.
The sources say that after getting a go-ahead from the EGoM, Reliance Power has written to the CAG, asking it to withdraw its 'undue favours' remark against it.
According to top-level sources, more private corporate houses are lobbying hard for back-door entry into the sale of coal at a higher price, through which they can make profit in thousands of crores of rupees, which they cannot do merely by producing power.
FOR DETAILED CAG REPORT, PLEASE REFER PAGE 6 OF 21 MAY 2012 ePAPER.
The empowered group of ministers (EGoM) has taken a decision recently to permit the Sasan developer Reliance Power to divert its surplus coal to its nearby Chitrangi power project.
What is surprising is that earlier the Anil Ambani-led Reliance Power had made another plea to the government to divert excess coal of the Tilaiya power project to another project, which had been rejected by the EGoM on the grounds that policy guidelines had to be framed on such matters.
In the presence of the power minister Sushil Kumar Shinde and the coal minister Shri Prakash Jaiswal, the EGoM chairperson Pranab Mukherjee presided over the meeting which took the decision on Reliance Power, wherein it was said that it was Shinde who had recommended the cancellation of one of the allotted coal blocks, Chhtrasaal, and its return to the government.
Since the other two coal blocks would fulfil the entire requirement of the Sasan project, the coal ministry also agreed to the proposal of the power minister to cancel the allotment of the Chhtrasaal coal block to Reliance Power and give it back to Coal India.
Reliance Power requested the government to allow them to divert excess coal of Kerandari B and C coal blocks, which they got for the Tilaiya project, for other projects. In these two blocks, Reliance Power already has excess coal to the tune of more than 400 million tonnes for the next 25 years. The government rejected this request.
Reliance Power claimed that they would produce 96 per cent coal from the reserves of Kerandari and divert an entire river for coal mining.
The UPA government's decision to offer 100 per cent excess coal block, which the CAG has defined as 'undue favour' to the tune of nearly Rs 16,000 crore, is all set to create new controversy for the government.
Earlier in its report, CAG had strongly observed, 'As per the terms and conditions governing the allocation of coal blocks, no coal should be sold, delivered, transferred or disposed off except for the stated captive mining purposes, except with the previous approval of the Central government on case to case basis. Any surplus coal is to be handed over to the local CIL subsidiary or to any person designated at a transfer price to be determined by the government.'
'There is a possibility of the production of surplus coal from the captive coal blocks, if the coal production materialises before the commissioning of the end-use project or if the coal production outpaces production in EUP. There could also be wilful diversion of coal to the black market by an allottee, as in the reported case of Prakash Industries, Allocattee of the Chotiya block in Chattishgarh. The allocation of excess coal and permission to use the surplus coal in other projects of RPL (Sasan) gave undue benefits to RPL over others thereby violating the principle of equity.'
The CAG strongly observed, 'As per as incentives were concerned the allocattees already has had substatial windfall gains on account of substantial difference between the price of coal supplied by CIL and the cost of coal produced through coal blocks allocated for captive mining. Out of 86 coal blocks which were scheduled to produce in the 11th plan period (up to 2010-11) only 26 blocks, including 15 blocks allocated to private sector started production as of 31 march 2011. This would imply some of the allocattes were non-serious about production.'
Bypassing such strong indictment by the CAG, the government has gone ahead by quoting the attorney general Goolam Essaji Vahanvati’s legal opinion, whose role came under scrutiny during the 2G scam. In the corridors of power, he is seen to be close to Reliance officials.
Interestingly, the coal ministry is of the view that in the coal allocation letter or in the bid document there is no such condition of allowing excess coal for other projects. On the special request of Reliance Power, the power minister Sushil Kumar Shinde piloted the EGoM meeting of the Sasan project in October 2008 and used its discretionary power to permit Reliance Power to divert the surplus coal to the Tilaiya power project in the absence of policy guidelines.
The coal ministry recently came out with a policy of surplus coal and uploaded its text on the ministry’s web site, but later on it was removed at the insistence of the Prime Minister’s Office.
According to the attorney general's opinion, the Ultra Mega Power Projects are not concerned with the production and sale of coal, but their mandate is to produce power. But, why such huge amount of excess coal is being allowed to be diverted for another project, where they already have blocks for excess coal, is a matter of curiosity to the investigators.
The sources say that after getting a go-ahead from the EGoM, Reliance Power has written to the CAG, asking it to withdraw its 'undue favours' remark against it.
According to top-level sources, more private corporate houses are lobbying hard for back-door entry into the sale of coal at a higher price, through which they can make profit in thousands of crores of rupees, which they cannot do merely by producing power.
FOR DETAILED CAG REPORT, PLEASE REFER PAGE 6 OF 21 MAY 2012 ePAPER.
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