This April’s decision of an Empowered Group of Ministers (EGoM), a reaffirmation, allowing use of surplus coal produced in mines allotted originally for only feeding Reliance Power’s Ultra Mega Power Project (UMPP) at Sasan in Madhya Pradesh, had, it now transpires, overruled the reservations of two senior officials.
The Comptroller and Auditor General of India (CAG) report on UMPPs, placed in Parliament on August 17, had said the EGoM’s decision resulted in financial benefit of Rs 29,033 crore to R-Power, an Anil Dhirubhai Ambani Group (ADAG) subsidiary.
Both Alok Perti, the then coal secretary, and P Umashankar, power secretary, had reservations on allowing the company this favour, a senior government functionary told Business Standard.
While expressing his disapproval against any move to allow diversion of coal to Chitrangi, another power project being set up by R-Power, near the Sasan UMPP, Perti had argued the allotment letter for captive coal blocks linked to Sasan did not specify any provision allowing this. “The allotment letter only stated that any excess coal produced can be transferred to the nearby Coal India Ltd (CIL) subsidiary,” said another senior official close to the matter.
Detailed e-mails seeking comment on the matter, sent to Coal Minister Sriprakash Jaiswal, Coal Secretary S K Srivastava and the ministry’s official spokesperson remained unanswered. The officials could not be reached via their mobile phones or their office telephone, except for the spokesperson, who said comments should be sought from the power ministry, as it was the administrative ministry for the EGoM. Jaiswal's office asked through a text message to "speak to the concerned officer for information". A spokesperson of the home ministry, currently headed by Sushilkumar Shinde, in whose tenure as power minister the EGoM decision was taken, said he would discuss the matter tomorrow. Repeated calls to Uma Shankar and Perti went unanswered.
An R-Power spokesperson, when asked to comment, said the company would do so tomorrow. Chief Executive Officer J P Chalasani had told Business Standard in a recent interview that the decision to use surplus coal from Sasan was ratified by the EGoM on two separate occasions. "The opinion of the Attorney General of India and the fact that the decision of the EGoM was upheld by the High Court of Delhi (in 2009) are testimony to the strong legal basis on which the decision was based," he had said.
Business Standard reviewed the allocation letter for Sasan. Clause 12 of the letter, in fact, states that no coal should be sold, delivered, transferred or disposed of, except for the stated captive mining purposes, except with the previous approval of the central government on a case-to-case basis. The allocation letter also states, under clause 6, that surplus coal, if any, could be handed over to the nearest Coal India subsidiary, at a transfer price to be determined by the government.
The company had bagged the 3,960-Mw Sasan UMPP through rate-based competitive bidding in 2007. It was allotted three captive blocks -- Moher, Moher-Almohri Extn and Chhatrasal – to meet the requirement of 16 million tonnes per annum (mtpa). Taken together, the three blocks have an annual production potential of about 25 mtpa.
In November 2007, the Madhya Pradesh chief minister had requested Prime Minister Manmohan Singh to allow surplus coal diversion to Chitrangi by R-Power. The matter was referred to the EGoM and it discussed the issue in two meetings, on May 28 and August 14, 2008. The panel recommended R-Power be allowed to use surplus coal from Sasan for its other projects where power was sold through rate-based bidding. Another condition for diversion was providing the Sasan UMPP priority in use of coal from the allotted blocks.
The EGoM, while re-affirming its 2008 decision in its third meeting on April 28 this year, had considered the opinion of the Attorney General, G E Vahanavati, on the matter. The AG’s opinion, reviewed by Business Standard, was that the government had the right to permit companies holding captive blocks to use surplus coal for other projects and that the EGoM’s approval to allow diversion was a “well considered decision”.
“The AG had interpreted the EGoM’s decision taken in 2008 and had said the decision was correct. Obviously, we will go by the opinion, as it explains and fortifies the 2008 decision,” Law Minister Salman Khurshid had said after the EGoM meeting on April 28. He had also said the government could not review decisions taken in the past.
