Decision to allow Reliance Power to divert surplus coal from 3,960 MW Sasan power project against public interest, Tata Power tells SC

The government's decision to allow Reliance Power to divert surplus coal from the 3,960 mw Sasan power project in Madhya Pradesh to its another 4,000-mw project at Chitrangi in the same state is detrimental to the public interest, Tata Power Company Ltd on Friday told the Supreme Court.It said that there is a difference of Rs 1.26 per unit in tariff of power generated from Sasan UMPP and Chitrangi power projects as Reliance was selling power from latter at Rs 2.45 whereas it charged just Rs 1.19 per unit from Sasan UMPP.

“The difference of tariff will burden the consumer for 26 years with Rs 25,400 crore and is, therefore, wholly detrimental to public interest...” and permitting Reliance to sell power at a premium is “arbitrary,” Tata said in its affidavit filed before the Supreme Court.

According to the company, the government could have directed the Anil Ambani firm to sell power at the same tariff as that of Sasan UMPP or get tariffs determined under the tariff regulations for the thermal power station.Alternatively, Reliance should have been asked to hand over the extra coal at raising cost to public sector coal companies who are reeling under shortage of coal and have to resort to imports to meet domestic demand of power generating companies and other industries, the affidavit filed through law firm Karanjawala & co stated.

The bidding process for Sasan UMPP was never meant or intended to vest the successful bidder, R-Power, with the right to get extra coal of 9 million tonne per annum which could be used for developing other power projects, it said, adding the coal ministry’s decision to divert “incremental” coal from the captive mines of Sasan has conferred largess for private gains and windfall profit to Reliance.The apparently “stringent” condition imposed on R-Power that the power generated from the excess coal should only be sold through “tariff based competitive bidding” is a misnomer and in fact misleading, TPC stated.

It added that the existing laws and regulations for the use of captive coal does not provide for a situation where a mine allotted for one project can be used for running two independent projects by the same promoter without following the process of allocation of coal block through the screening committee and without following the procedure under the Coal Block Allocation Guidelines.

Besides, the existing policies does not permit the government to relax the primary condition of ‘exclusive use’ to the extent of 9 million tonne of coal proven reserves (including an extra mine of 5 million tonne) that was captive for Sasan UMPP, TPC said.It also said: “The diversion of this substantial quantity of coal from captive mines of Sasan UMPP cannot be countenanced through the exercise of power under clause (xii) of the allocation letters whereby the entire economics of the project that was bid out is dramatically altered.”Such benevolence on part of the government could not have been reasonably foreseen by a prudent and bonafide bidder, it added.

According to Tata, if the project had to be on the basis that captive mine would be for the promoter (and not captive for project), it would have vitally affected the bids received.“The petitioner will have itself given a much lower bid than Reliance and would not have run away from the race, had it been known that such a valuable resource of coal would be given to the promoter as a prize for the bid,” the affidavit stated.TPC's response has come on the Centre's reply which rejected Tata's allegations of favouring ADAG group firm Reliance Power for usage of coal from mines alloted to the Rs 20,000 crore Sasan Power Project.

The Centre had also questioned the locus standi of Tata Power, saying, "The petitioner cannot allege violation of any legal right vis-a-vis tender process, as it waived its right by not extending the bid."Early during the arguments before the Bench headed by Justice G S Singhvi, senior advocate Harish Salve, appearing for TPC, had sought permission from the apex court to file its rejoinder to the government's affidavit.The matter is coming up for hearing on September 13.