A-G’s Position On Sasan Pulverises Ministry’s Stand

NEW DELHI: The Attorney General’s legal opinion on the diversion of excess Sasan coal has flown in the face of the power ministry which contends that Reliance Power may be asked to hand over surplus coal to a Coal India (CIL) subsidiary at a price to be determined by the government. The A-G has said the ultra mega power project cannot be directed to produce surplus coal and transfer the same to another entity. This, the A-G said, is because a UMPP is meant for power generation, not for mining coal.
Moher, Moher-Amlori extension and Chatrasal captive coal blocks allocated to the Sasan UMPP of Reliance Power are estimated to have 9 million tonne a year of excess coal. The Empowered Group of Ministers (EGoM) on UMPPs used its discretionary powers in 2008 to permit the developer, Reliance Power, to divert the surplus coal to its nearby Chitrangi power project in the absence of policy guidelines. The panel also accorded in-principle approval to Reliance Power for use of excess coal from Tilaiya UMPP mines but permission has not been granted to the company in this regard.
But the Comptroller and Auditor General (CAG) created a big controversy last October by saying in a draft audit report that the decision resulted in windfall gain of R1.20 lakh crore to the private developer. The CAG has since reduced its windfall gain estimate to Rs 15,000 crore.
Tata Power, which participated in the bidding for the Sasan UMPP, has also challenged the government’s decision in the court.
The EGoM had sought the AGE legal opinion in a bid to defuse the controversy arising from the ministerial panel’s 2008 decision allowing Reliance Power to divert excess coal from Sasan mines.
“A UMPP is for generation of power and not mining of coal. The government cannot direct the ultra mega power projects to whom coal blocks have been allocated to produce more or excess coal which can be transferred to such persons as it may direct,” A-G Goolam Essaji Vahanvati has said in the opinion given over the legality of the government’s decision of 2008 allowing Reliance to use excess coal from Sasan UMPP at its nearby Chitrangi power project.
The coal ministry has approved Reliance Power’s proposal to divert 9 million tonnes a year coal from the Sasan captive mines to the company’s Chitrangi power project, which will meet balance fuel requirement from other sources.
“UMPPs are concerned, not with production and sale of coal at prices which would enable “profitability” in the “business of mining coal”, but with conversion of coal to power; power being one of the most pressing infrastructure requirements in the country. While a UMPP is bound to ensure sustained availability of power, and while it is required to get the mining plan approved, it cannot be directed or required to mine coal for any purposes except for generation of power,” elaborates the legal opinion.
The AGE favorable legal opinion has come as a big relief to the government reeling under the political fall-out of the CAGE windfall gain observations over diversion of excess Sasan coal.
Finance minister Prana Mukherjee-led EGoM on UMPPs, which met here on Saturday, stuck to its guns over the panel’s 2008 decision permitting Reliance Power to divert surplus Sasan coal.
Meanwhile, Tata Power has said: “The Sasan matter is sub judice. The case is admitted in the honourable Supreme Court and will be heard soon. Tata Power believes that the award of the contract and the post award changes in the terms/ basis of the tenders invited had resulted in an arbitrary and discriminatory denial of level playing field to the other bidders.”