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Home News Power Sector News Undue benefit to Reliance Power, says CAG report on UMPPs

Undue benefit to Reliance Power, says CAG report on UMPPs

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Reliance powerThe CAG report on Ultra Mega Power Projects (UMPP) under Special Purpose Vehicles for the year-ended March 31, 2012 has found that the permission for use of excess coal by Reliance Power from the three blocks allocated to Sasan UMPP after its award, not only vitiated the bidding process but also resulted in undue benefit to Reliance Power.


The report says that to ensure fair play, a level playground and transparency of bidding process for future developers to derive comfort in Government action, the allocation of the third coal block — Chhatrasal — be appropriately reviewed.

Since the developer had committed that it would be able to source 20 million tonnes from the two blocks there would be adequate coal to feed the Sasan UMPP.

"Audit has estimated the financial benefit that will accrue to the project developer on the basis of comparison of tariff of Sasan project (Rs 1.196/unit) with that of Chitrangi (Rs 2.450/unit for Madhya Pradesh and Rs 3.702/unit). The overall financial benefit to Reliance Power due to impact of difference in tariff works out Rs 29,033 crore with a net present value of Rs 11,852 crore,'' the report says.

Commenting on the CAG report, a Reliance Power spokesperson said:"Comparisons between Sasan and Chitrangi tariff to quantify benefits is misleading – no two projects can have the same tariff even if the coal source is the same."

Tariffs vary based on risk profile and various other project-specific parameters, the spokesperson said, adding that Chitrangi has a completely different risk profile than Sasan and includes extra costs that are not present in Sasan UMPP.

"The decision of permitting surplus coal for power generation has been ratified by the Empowered Group of Ministers on two separate occasions (once in 2008 and again in 2012)," the spokesperson said.

Source- Hindu


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