RPower defies govt directive to produce coal

The matter relates to the issue of transfer of land held by Coal India subsidiary Northern Coalfields Ltd to Sasan Power Ltd, the Reliance Power subsidiary

Anil Dhirubhai Ambani-owned Reliance Power Ltd (RPL) started production from captive coal mines allotted for its showcase Sasan Ultra Mega Power project (UMPP) last month despite a government directive asking the company to stop mining activities until a few formalities are over.

The matter relates to the issue of transfer of land held by Coal India subsidiary Northern Coalfields Ltd (NCL) to Sasan Power Ltd (SPL), the Reliance Power subsidiary developing the 4,000 Megawatt (Mw) project. Even while the two coal blocks – Moher and Moher Amlohri Extension – were handed over to Reliance, it transpired that NCL has already acquired part of the land of the blocks for its own projects.

 

NCL had in July this year complained to the coal ministry that, even while legal transfer of the land to SPL was still awaited, SPL has started overburden removal and dumping on the land vested with NCL under Coal Bearing Area (CBA) Act. Following this, the ministry, in a August 31 letter, asked Reliance to stop mining operations until transfer of a part of the land to the company is notified and legal opinion on the matter received.

On September 3, a day before its Annual General Meeting (AGM), and four days before an inter-ministerial group was to decide on cancellation of its mining right, RPL announced it has started production and plans to ramp it up to 20 Million Tonne (MT) per annum over four years.

“The coal ministry had asked for the opinion of the Department of legal Affairs under the law ministry on whether the piece of land falling under the command area of NCL can be transferred to Sasan Power Ltd. The ministry had asked Reliance Power to stop work on that part of the two blocks which is part of the NCL command area until clear legal opinion is available,” a senior official close to the development told Business Standard.

Reliance Power, however, denies any wrongdoing. “We have responded to the communication received from the coal ministry and the issue regarding the land being used for overburden dump and infrastructure area, which is non-coal bearing area, has been resolved,” a company spokesperson told Business Standard in an email response. He also added that production from the blocks is progressing as per plan to meet the proposed commissioning of the plant in December this year.

Reliance Power had justified commencement of production in a letter dated September 13 by arguing that mining activities were started only after obtaining all statutory approvals and clearances. The environment and forest clearances were granted for the blocks in 2008 and 2010, respectively. The mining plan was approved by coal ministry in March 2009 and Consent to Operate received from the Madhya Pradesh Pollution Control Board (MPPCB) in July 2009. Also, the mining lease was signed with the state government in September 2011.

In an October 2011 meeting between the coal ministry, NCL and SPL, it was agreed that the land for overburden removal and infrastructure would be transferred to SPL. “Even NCL gave its no-objection to the decision, which is formally documented in the Minutes of the Meeting,” the company said in its letter to coal ministry.

Reliance Power also argues that the portion of land over which NCL has raised objection, has been notified for acquisition by SPL under the Land Acquisition Act 1894. “NCL raised its objection only at the last stage when land was being handed over to SPL by the District Collector. The company also said it was “extremely surprised” on NCL objecting to SPL using the overburden dump and infrastructure area, which is non-coal bearing area, even after agreeing to handover this land to SPL.

The company further pointed out that any hindrance to the development of the blocks at the current advanced stage would severely impact project cost and tariff by impacting the plant’s commissioning schedule. Power supply from Sasan UMPP would result in financial benefit of Rs 120,000 crore to the seven procurer states over the 25 year Power Purchase Agreement (PPA) period due to its “extremely competitive” tariff of Rs 1.196 per unit.   

The coal ministry had allocated the two coal blocks to Power Finance Corporation (PFC), the nodal agency for UMPPs, in September 2006. The Sasan UMPP was transferred to Reliance Power, along with the blocks after tariff-based competitive bidding in August 2007.

The Comptroller and Auditor General of India (CAG), in its report on UMPPs placed in Parliament on 17 August, had said the government's decision to allow diversion of surplus coal from Sasan UMPP resulted in financial benefit of Rs 29,033 crore to Reliance Power.