Reliance Power got undue benefit of Rs 29,033 crore: Govt's auditor

1. The government's auditor has said that Reliance Power, owned by Anil Ambani, benefited unduly from a government decision that allowed the company to  use surplus coal from its captive block for another project.

2. As a result,  Reliance Power benefited by Rs 29,033 crores, said the Comptroller and Auditor General (CAG) in a report presented to parliament today. (Read full CAG report here)
   

3. Shares in Reliance Power fell more than 6 percent on Friday.

4. Reliance Power is developing a 4000 MW project at Sasan in Madhya Pradesh and was allotted  two captive coal blocks to fuel this project.  The Sasan plant was then allotted a third coal block by the government.  Reliance Power  then said it had surplus coal.  The government's auditor, the Comptroller and Auditor General (CAG) wants  the assignment of the third coal field to be reviewed. "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 the third coal block (Chhatrasal) be appropriately reviewed,"  the auditor said in its report.

5. The company later received government approval to use coal from these blocks for another power project being developed by the company at Chitrangi in Madhya Pradesh . But this plant would supply power at a higher tariff than the Sasan project.  So the Chitrangi plant would obtain coal at the same price as Sasan, but sell it at a higher rate, the auditor's report said.

6. Tata Power , the competing bidder for the Sasan project, had earlier challenged the government's decision and the matter is pending in the Supreme Court.

7. In a statement today,  the company said about the additional coal block that was assigned to its Sasan plant, "Reliance Power had no role in allotment of excess coal reserves." It also said that the amount of coal blocks that would be attached to the Sasan  plant was decided before Reliance Power bid or the power project .

8. Reliance Power also said that   the decision to  allow  surplus coal from Sasan  to be used elswehere was ratified twice by a group of ministers, in 2008 and again in 2012.

9. The company also says that stringent conditions have been imposed by the government for the use of surplus coal.

10. Reliance Power says that "Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure." It claims that the auditor's guidelines would mean that "India's coal remains bottled underground, while India continues to import coal from international markets at high prices and burdens the end power consumer.

(with inputs from Agencies)