RPower starts controversial Sasan coal production

Last Updated: Mon, Sep 03, 2012 19:22 hrs

Reliance Power Ltd on Monday announced it had commenced coal production at two of its Sasan power project’s captive coal mines—Moher and Moher Amlohri extension.

The company did not divulge any details on the amount of initial coal production. The announcement comes on the same day when the government decided to ask the companies holding 58 blocks to present their case before an inter-ministerial group later this week.

“We are targeting to reach the full 20 million tonnes per annum capacity in four years’ time,” said J P Chalasani, chief executive officer of RPower. The first unit of the Sasan power plant in Madhya Pradesh is expected to be commissioned by year-end.

Sasan mine allocation
  • Reliance Power Limited, controlled by Anil Ambani, awarded three captive coal mines for its 4,000-Mw Sasan UMPP -Moher, Moher Amlohri extension and Chhatrasal
  • Tata Power takes RPower to court challenging the use of surplus coal for another project
  • Delhi High Court dismissed Tata Power’s petition. The case is now in the Supreme Court
  • CAG says Rs 29,033 crore undue benefit to RPower on coal diversion to another project
  • CAG recommends review of allocation of Chhatrasal mine

Union Coal Minister Sriprakash Jaiswal had earlier said the government would take action against private groups that were not serious about developing mines, including de-allocation. RPower is also one of the firms that had received showcause notices in May this year for delay in mine development.

“There have been some reports in sections of the media about the slow progress of these mines. On the contrary, these mines have been developed in a record time for any greenfield mine in India. This can be measured from the fact that the mine plan for this project was approved in March 2009, which is the starting point for any mine development,” Chalasani said in a conference call.

RPower was allocated three coal captive mines with its 4,000-Mw Sasan ultra mega power project. The project was won by competitive bidding where the company gave a tariff of Rs 1.19 per unit. The tariff was among the lowest rates in the country.

After the company was awarded the contract, it said the mines held excess coal, and sought government permission to use the excess coal to set up yet another power project. An empowered group of ministers (eGoM) had given clearance to the plan and the company is developing the 4,000-Mw Chitrangipower project, also in Madhya Pradesh.

This diversion of surplus coal soon became a controversy. Tata Power Co Ltd had filed a case in the Delhi High Court questioning the change in bid conditions of the project after the project was awarded. The case went in favour of RPower and Tata Power took it to the Supreme Court.

More recently, a report by the Comptroller and Auditor General of India (CAG) said the permission given to the company to use the surplus coal resulted in undue benefit to the company to the tune of Rs 29,033 crore. CAG also recommended a review of the allocation of Chhatrasal mine.

RPower has won two ultra mega power projects after Sasan—another captive coal-based power project at Tilaiya, Jharkhand. Its Krishnapatnam, Andhra Pradesh, power project is based on imported coal from Indonesia, which is stuck due to a change in the law in that country. RPower had bought mines in Indonesia in 2008.

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