RPower hits back, says got surplus coal through advanced tech not favoritism

Shares in Reliance Power tanked more than 6 percent today to trade at Rs 87.65 after the CAG said the company unduly benefited from a government decision allowing the power producer to use surplus coal from its captive block for another project it was not meant for.

CAG said the Anil Ambani-led firm got undue benefit of Rs 29,033 crore when the government allowed use of surplus coal from blocks allotted to Sasan power plant for its other projects.

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CAG in its report tabled in Parliament said subsequent to award of the 4,000 MW Sasan ultra mega power project to RPL, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group’s Chitrangi project in Madhya Pradesh.

However, in a release to the BSE, RPower clarified that CAG’s observations did not factor in a looming coal crunch.

It clarified that the company got surplus coal by using advance technology, and not through favouritism. “Coal mines were allotted to UMPPs via tariff-based bid process. EGoM had ratified allocation of coal blocks to the company,” the company said in its statement.

“Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure, Conventional mining methods would result in this coal remaining underground a national wastage.”

Reliance Power, controlled by billionaire Anil Ambani, is developing a 4000 MW project at Sasan in Madhya Pradesh and was allotted captive blocks to fuel this project. The company later received government approval to use coal from these blocks for another power project being developed by the company.