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MAY 18 2012

R Power asks CAG to drop ‘undue benefits’ observation

  • Economic Times, ET Bureau / Hyderabad
  • Created: Fri 18th MAY 2012

Reliance Power has requested the Comptroller and Auditor General (CAG) to drop ‘undue benefits’ observation on surplus coal diversion from the Sasan and Tilaiya ultra mega power projects (UMPPs), citing the Attorney General’s recent legal opinion justifying the ministerial panel’s decision on Sasan and government’s clarification that the Tilaiya UMPP will be governed by a comprehensive policy on diversion of surplus coal.

The CAG created a big controversy last October by saying that the government’s 2008 decision permitting diversion of surplus coal from the Sasan and Tilaiya resulted in a R1.2 lakh crore windfall gain to Reliance Power. Since then, the government auditor has slashed the windfall gain estimate to R15,000 crore. The CAG made these observations in a draft audit report on performance of UMPPs.

But the AG has justified the governments’ decision permitting Reliance Power to use surplus coal from Sasan at the nearby Chitrangi power project, saying the decision was in sync with the law prevailing at that time. Meanwhile, the government has put paid to the controversy arising from an in-principle approval granted by it to Reliance Power to use excess coal from the Tilaiya mines, by clarifying that it is working policy guidelines for diversion of surplus coal from captive mines and that Reliance Power will be allowed to use surplus coal from the Tilaiya UMPP block in accordance with that policy only.

An empowered group of ministers on UMPPs, led by finance minister Pranab Mukherjee, used its discretionary powers in 2008 to allow Reliance Power to divert surplus coal from the Sasan mines to the nearby Chitrangi power project in the absence of concrete policy guidelines. It also granted an in-principle approval to Reliance Power for diversion of excess coal from the Tilayia mines. However, a final decision is yet to be taken.

The CAG recommended in the draft audit report that the government reviewed its decision and approval permitting R Power to use excess . To defuse the controversy triggered by the CAG’s adverse observations, EgoM referred the matter to the AG.


Comptroller and Auditor General Reliance Power Ultra Mega Power Project Power Tilaiya UMPP

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