Reliance Power got undue benefit of Rs 29,033 cr: CAG
Flaying post-bid concessions to Reliance Power, the CAG on Friday said the Anil Ambani-led firm got undue benefit of Rs 29,033 crore when the government allowed use of surplus coal from blocks alloted to Sasan power plant for its other projects.business Updated: Aug 17, 2012 14:54 IST
Flaying post-bid concessions to Reliance Power, the CAG on Friday said the Anil Ambani-led firm got undue benefit of Rs 29,033 crore when the government allowed use of surplus coal from blocks alloted to Sasan power plant for its other projects.
CAG in its report tabled in Parliament said subsequent to award of the 4,000 MW Sasan ultra mega power project to RPL, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group's Chitrangi project in Madhya Pradesh.
"A reading of all the clauses in the allocation letters together conveyed that clauses were inserted in the coal allocation letter as a safegaurd measure to prevent misuse of coal by the developer.
"The permission to use surplus coal in other projects of the bidder after award of the contract based on acceptance of the lowest tariff, vitiated the sanctity of the bidding process which would result in post bid concessions to the developer having significant financial implication," it said.
CAG said the permission to use of excess coal from Moher, Moher Amlohri and Chhatrasal blocks allocated to RPL's Sasan power project after its award "not only vitiated the bidding process but also resulted in undue benefit to RPL".
"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 official auditor said.
CAG said it was not clear how Power Ministry in October 2006 came to the conclusion that 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 ministry of coal was prevailed upon in October 2006 itself to allot an additional block (Chhatrasal) of coal to Sasan ultra mega power project by de-allocating it from the public sector NTPC is not clear," it said.
CAG said to ensure fair play, a level playground and transparency of the bidding process for future developers to derive comfort in Government action, the allocation of third coal block (Chhatrasal) should be appropriately reviewed.
In seeking such action, it pointed to RPL's commitment to source 20 million tons from the two initial blocks which was adequate to feed the Sasan project.
The audit estimated the financial benefit that will accrue to RPL on the basis of comparison of tariff of Sasan project (Rs 1.196 per unit) with that of Chitrangi project (Rs 2.450 for Madhya Pradesh and Rs 3.702 for Uttar Pradesh).
"Government need to generate confidence among bidders of future UMPPs of its equity and fairness," it said.