In what could delay the implementation of the Sasan ultra mega power project (UMPP), Mumbai-based Tata Power has filed a petition in the Delhi High Court.
In what could delay the implementation of the Sasan ultra mega power project (UMPP), Mumbai-based Tata Power has filed a petition in the Delhi High Court challenging the Centre’s decision to allow Reliance Power Ltd to divert coal from the captive mines of the UMPP for use in its other projects.
The 4,000 mw Sasan UMPP was awarded to Reliance Power, an Anil Dhirubhai Ambani Group (ADAG) company, on July 30, 2007. It is expected to be commissioned by December 2011.
In the petition, Tata Power said that as per the terms of the tender, three coal blocks — Moher, Moher-Amlori Extension and Chhatrasal — were allocated for exclusive use by the Sasan UMPP. But soon after, the Madhya Pradesh government appears to have asked the Centre to allow Reliance Power to use extra coal from these captive mines for other coal-based power projects it is developing.
The petition added that Reliance Power, on the basis of this recommendation, sought the Central government’s permission to use the coal. The Centre referred the matter to an empowered group of ministers (eGoM). “The eGoM on August 14, 2008, decided to permit ‘incremental coal’ quantity to be used by Reliance Power for power generation in its other projects with the limitation that the power generated by utilising this incremental coal would be sold through tariff-based competitive bidding,” said the petition.
The ADAG company planned to use the incremental coal for its upcoming 4,000-mw coal-based power project at Chitrangi in Madhya Pradesh. However, the Chitrangi project was given this coal not through the competitive bidding process but through a memorandum of understanding (MoU) that 37.5% of the power generated at the Chitrangi project will be supplied to Madhya Pradesh at a regulated tariff.
Calling this a violation of the eGoM’s recommendation, Tata Power said such a move will mean a “whopping illegitimate windfall gain of nearly Rs 50,000 crore (for Reliance Power) over a period of 25 years at the cost of electricity consumers”. Tata Power, which was one of the bidders for the Sasan project, said if it was aware that the captive mines could lead to incremental reserves, it would have made a “significantly different bid” during the auction of the UMPP.
A Tata Power spokesperson told DNA Money, “Yes, we have filed the petition in the Delhi High Court. We don’t wish to comment any further as the matter is subjudice.”
But a source close to Reliance Power, on condition of anonymity, said that neither the ADAG company nor the government has violated any rules and that the mines have no incremental reserves. “We haven’t been served any notice so far,” the source said.
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