'DNA' investigations: Reliance gained as govt ignored Coal India pleas

Ignoring stiff opposition and pleas from the state-run Coal India Ltd, the Union government in 2006 allocated two coal blocks to the Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh. Officials had opposed the deallocation of the blocks from the Maharatna public sector undertaking. Their suggestion for alternative coal blocks for the 4,000MW Sasan project, subsequently awarded to Reliance Power, was also ignored, delivering a telling blow to CIL’s coal production programme.

The Sasan UMPP was linked to the national grid on September 17. Reliance Power expects an annual coal production of 20 million tonnes from the Moher and Moher-Amlohri blocks which were deallocated in 2006. The decision prompted CIL subsidiary National Coalfields Ltd (NCL) to call  it a “huge national loss”.

Ramendra Kumar, former MP and CPI national secretary, who is also a  member of the joint consultative committee of NCL, says the private firm was favoured. “First, the ministry of coal (MoC) deallocated these coal blocks from the PSU and then appointed Reliance for the UMPP. Thus, it became the ultimate beneficiary,” Kumar said.

VK Singh, then chairman and managing director of NCL, had warned the then coal secretary in March 2006 that the withdrawal of these blocks from the NCL would adversely affect its production programme. l Turn to p8

“There is a programme to produce 81.50 million tonnes of coal by 2019-20 inclusive of 10 million tonnes from Moher. Hence, kindly reconsider dereservation of Moher block as it would seriously affect NCL’s production capacity,” he wrote in his letter. 

In October that year, Singh, a mining engineer with over 30 years  experience, suggested an alternative in Semaria Block, adjacent to Moher block. CIL subsidiary Central Mine Planning and Design Institute Ltd (CMPDIL), during its presentation to the MoC in March 2006, also showed the above two blocks as being essential for NCL.

Earlier, at a high level meeting on March 1, 2006, to discuss the allotment of Moher and Moher Almohri blocks for the Sasan project, the CIL chairperson and chief managing director of NCL resisted the move. Minutes of the meeting show that the CIL chairman had proposed alternative blocks too.

Months after the blocks were taken away from the NCL, Reliance was awarded the build-own-operate (BOO) contract for the UMPP by the ministry of power. Incidentally, then Union power secretary RV Shahi was present
at the March 1 meeting. A comptroller & auditor general report would later question awarding the Sasan UMPP contract to Reliance.

“The then power secretary who worked with Reliance for eight years may have struck the deal for the company,” said Padamjit Singh, chairperson of the All India Power Engineers Association (AIPEA). Shahi was managing director of Reliance Energy from 1994-2002 before joining as power secretary. He retired in 2007.

Shahi denied the charges, stating that the ministry of power had no role either in the allocation of coal blocks or in awarding the UMPP contract to Reliance. “It was decided by an independent agency and not the ministry of power. So how can you blame us for favoritism?” he told DNA.

A Reliance Power spokesperson said the company had no role in the allotment of the coal reserves to the Sasan UMPP. “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, Reliance Power had no role in the allotment of coal blocks and extent of coal reserves therein to Sasan UMPP,” he said. “The coal blocks were allotted months before the UMPP bid submissions.”

What did the PSU lose? The Rihand Super Thermal Power Plant in Uttar Pradesh linked to these mines suffered, as the NCL CMD’s letter predicted. In his letter, Singh wrote that the NCL had no alternative to the Moher-Amlohri block for the plant’s coal demand for 40 years. The NCL also permanently lost over 50 million tonnes due to violation of coal ministry guidelines that say private sector blocks should be at reasonable distance from the CIL’s existing mines to avoid operational problems.


How CIL opposed the allocation tooth and nail
March 1, 2006: The CIL, NCL and CMPDIL oppose the proposed allocation of Moher and Moher-Amlohri coal blocks for Sasan UMPP at a high level meeting

March 14: VK Singh, NCL chief managing director, writes to the coal ministry, opposing the allocation

March 30: Central Mine Planning and Design Institute Ltd (CMPDIL) makes a presentation to the ministry of coal, asking for Moher and Moher-Amlohri blocks to be spared for NCL

October 8: VK Singh writes another letter to the coal ministry, opposing the allocation

October 17: CIL chairman meets the coal secretary, but in vain