RPower takes govt to court on Chhatrasal coal block cancellation

Coal ministry through a notification on May 7 cancelled the allocation of Chhatrasal coal block to its subsidiary Sasan Power

Reliance Power has challenged the government's decision of cancelling allocation of Chhatrasal coal block to its subsidiary Sasan Power Ltd. In a writ petition filed in the Delhi High Court on Thursday, the company sought legal remedy against the coal ministry's decision. The ministry, through a notification on May 7, cancelled the allocation and also withdrew the permission for supplying surplus coal of up to nine million tonne per annum from Moher, Moher-Amlohri Extension and Chhatrasal coal mines to the thermal power plant owned by Chitrangi Power Pvt Ltd belonging to the same group.

Though the government notification for de-allocation mentions that it relied on the Supreme Court’s judgment on cancellation of coal blocks, the company argued the blocks allocated to ultra  -mega power projects (UMPPs) were not the subject matter of the apex court order. The apex court rather specifically stated the allotments made to the UMPPs were not being disturbed, the company said in its petition.

Prior to the bid submission for Sasan UMPP, three coal blocks – Moher, Moher-Amlohri Extension and Chhatrasal -- having a reserve of 700-800 million tonnes were allocated to Sasan Power Limited, which was then a wholly owned subsidiary of Power Finance Corporation (PFC).

In its petition, the company has said PFC had informed prospective bidders about the blocks ahead of the bid deadline. The allocation of three coal blocks for Sasan UMPP and their availability throughout the life of the project was, therefore, an integral part of bidding terms and conditions and was a significant reason for offering the highly competitive levelised bid tariff of Rs 1.196 per unit by Reliance Power.

“Availability of coal from Chhatrasal (along with coal from Moher and Moher Amlohri Extension coal blocks) was a fundamental condition and the very foundation of the bid, which resulted in offering highly competitive tariff,” said the company in its petition. The Chhatrasal coal block is, therefore, crucial and necessary for sustainability of competitive tariff of Sasan UMPP.