The Comptroller and Auditor General (CAG) said Anil Ambani’s Reliance Power gained Rs 29,033 crore by diverting coal from its Sasan project to Chitrgani project, both in Madhya Pradesh. The CAG report on the award of ultra mega power projects (UMPP) was tabled in Parliament today. CAG has also sought a review of the allocation of a third coal mine (Chhatrasal) for Sasan.
CAG has taken note of the excess coal in Tilaiya UMPP of Reliance Power Ltd (RPL) as well, but it has not prepared any report on it. “We will audit the UMPP only after the empowered group of ministers (EGoM) takes a decision on the excess coal,” senior CAG official said.
Besides raising objections to the government’s decision to allow RPL to divert surplus coal, CAG objected to the decisions to permit Tata Power (Mundra) and RPL (Krishnapatnam) to acquire more land than required and effect changes in the bid norms after the award. The decisions were taken by the EGoM during Sushilkumar Shinde’s tenure as power minister.
The permission to use surplus coal in other projects vitiated the sanctity of the bidding process and amounted to post-bid concessions. “This decision resulted in financial benefit of Rs 29,033 crore with a net present value of Rs 11,852 crore to the project developer (RPL),” the report said. The amount has been arrived at through comparison of tariff of Sasan project (Rs 1.196 per unit) with Chitrangi project (Rs 2.450 for Madhya Pradesh and Rs 3.702 for Uttar Pradesh). Tata Power, also a bidder for the Sasan UMPP, contested the post-bid permission of surplus coal diversion facility to RPL. Tata Power’s special leave petition on this is pending in the Supreme Court.
“This aspect of alternatively using coal from mines was not there before. If it was there, everybody would have bid their tariffs accordingly. If you want to do it, do it for new projects and not retrospectively,” Anil Sardana, managing director of Tata Power said after the report got tabled.
CAG said it was not clear how the power ministry in October 2006 came to the conclusion that the two initially allocated blocks for the Sasan project (Moher and Moher Amlohri) would be inadequate to fire the 4,000 MW plant. “The basis on which the Ministry of Coal was prevailed upon in October 2006 itself to allot an additional coal block (Chhatrasal) to Sasan ultra mega power project by de-allocating it from the public sector NTPC is not clear,” it said.
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CAG audit observed the process of identifying project developers had inadequacies, as the minimum qualification criteria for prequalification of bidders, like net worth, was on the lower side, considering the project sizes. It also observed some key conditions of the standard bidding documents were diluted citing increasing competition or providing comfort to developers.
The bid evaluation process was completed and the Letter of Intent issued to RPL for Sasan, Krishnapatnam and Tilaiya UMPPs without verifying the claimed experience. Bid process consultants E&Y and evaluation committees failed to perform their functions effectively.
CAG said the government needed to generate confidence among bidders of future UMPPs in respect to equity and fairness.