No two projects can have same tariff, even if coal source was the same

Reacting to the CAG report, Reliance Power said the mines allotted to ultra mega power projects were through tariff-based competitive bidding.

J.P. Chalasani, CEO, Reliance Power, said the CAG had erred in comparing the Sasan project and Chitrangi project tariffs to quantify benefits.

“No two projects can have the same tariff, even if the coal source was the same,” he said. The Chitrangi project has a different risk profile and includes extra costs that are not present in the Sasan project, he said.

CAG’s report concludes that the permission for use of excess coal by RPower from the three coal blocks allocated to Sasan UMPP (ultra mega power project) after its award vitiated the bidding process. CAG has recommended that the allocation of third coal block should be appropriately reviewed.

These recommendations, made earlier by CAG late last year, were presented to the Empowered Group of Ministers (EGoM) in December last year. It was learnt that the EGoM recommended that the matter be thoroughly examined by the Coal Ministry in consultation with the Power Ministry, Law Ministry and the Attorney-General and put it up for review to the EGoM, he said.

The EGoM on UMPPs re-affirmed in April that the decision to permit usage of surplus coal from Sasan was a well considered decision.

Further, the EGoM noted that the coal blocks allocated to Sasan UMPP (which includes Chhatrasal Coal Block) could not be reviewed, he added.

The decision has been ratified by EGoM on two separate occasions (2008 and 2012). This decision was also upheld by Delhi High Court (2009).


On the vitiation of bid conditions of Sasan UMPP, Chalasani said coal blocks with reserves of 760 million tonnes were allotted to Power Finance Corporation, a Government of India undertaking, in September/October 2006.

These were part of the bid documents and were furnished to all bidders.

Hence, RPower had no role in the allotment of coal blocks and extent of coal reserves to Sasan project.

All bidders were aware that the project requirement was around 400 million tonnes, and were free to assess their ability to extract surplus coal.

Further, they were aware of the conditions in the coal block allotment letter, which allowed the Union Government to permit usage of surplus coal to Sasan plant.

This has also been upheld by the Delhi High Court, which dismissed Tata Power’s petition stating that Tata Power ought to have been alive to the fact that if necessary, the Union Government could exercise the power it had reserved to itself for diverting the incremental coal, he said.

Chalasani said that between January and March, RPower had brought out inconsistencies in CAG’s computations on numerous occasions, including three presentations made to senior officials of CAG.


Anil Sardana, Managing Director, Tata Power, said, “Since 1998 Tata Power had been applying for mines and in every allocation everyone else was found right except Tata Power.

“I am only glad that it has come up now. However, this aims at taking people back in terms of distracting them and making them go back to their paperwork.”

(This article was published on August 17, 2012)
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