Refuting allegations that Jindal Steel and Power benefited the most from coal block allocations by selling power at high prices despite having the cheapest coal, its chairman and Congress MP Naveen Jindal today said JSPL's subsidiary Jindal Power Limited (JPL) was highly profitable not due to allocation of cheap coal but because of its excellent track record.
"These coal blocks has not been given to an MP, they have been given to a company which has an excellent track record of implementing projects," Jindal told CNN-IBN.
Jindal is facing heat after it came to light that JPL, a subsidiary of JSPL, was the first Indian power company to operate on a "merchant power" basis, which allowed it to sell electricity at a market rate that was higher than the rate at which power regulators fixed tariff for companies selling power to states through long-term power purchase agreements (PPAs).
"The problem is not that the company got access to massive reserves of coal. The issue is that it uses cheap coal to sell power at prices much higher than the others," Sudeip Srivastava, an activist based in Chhattisgarh who has closely tracked the performance of the state's power projects, told Times of India.
However Mint's Mark to Market report argues that Jindal invested in extracting coal from blocks at a time when coal prices were cheap at around $25 a tonne and was also the first company to actually develop its mines before building a power plant. Hence, instead of defending his cash flows, Naveen Jindal should actually be bragging about his business acumen of securing the right deal at the right time.
Responding to the allegations made by the BJP that Congress has benefited financially in coal block allocations, Jindal said, "What can you expect from an opposition party other than leveling these baseless charges. Let them prove these charges. I entered politics in 2004. Before that too our company has been located coal blocks and we have performed well."
"I think we should not be playing unnecessary politics with the economy of the country because it is going to hurt everyone's interest," he added.