The Sasan UMPP is being developed through a special purpose vehicle, Sasan Power (SPL), which was transferred to the successful bidder, Reliance Power, in 2007. In its report on Compensatory Afforestation in India, tabled in Parliament, the CAG said the ministry not only failed to exercise due diligence in ensuring compliance but also overlooked deficiencies pointed out by a subordinate authority of the ministry.
However, the company has strongly refuted CAG's observations. CAG's observations regarding the exemption given to SPL from acquiring non-forest land for compensatory afforestation are misplaced and bereft of facts. As per the bidding conditions of the project and the PPA signed with procurers, the responsibility for acquiring the land for the project and mines is that of state government where the project is being executed, a Reliance Power spokesperson said.
The CAG said that SPL, according to guidelines and clarifications for diversion of forest lands for non-forest purpose under the Forest (Conservation) Act, 1980, had to provide equivalent area of 1,384.96 hectare of non-forest land for compensatory afforestation. But Madhya Pradesh chief secretary issued a certificate of non-availability of non-forest land in Sidhi district instead of a certificate of non-availability of non-forest land for the entire state.
"Based on this ineligible certificate issued by the chief secretary, the ministry exempted SPL from providing non-forest land of 1,384.96 hectare in case of the UMPP and for the coal mining project in violation of the Forest (Conservation) Act, 1980," the CAG said.
As far as possible, the non-forest land for compensatory afforestation had to be identified contiguous to or in the proximity of Sidhi district and in the event that non-forest land for compensatory afforestation was not available in the Sidhi district, it could have been identified anywhere else in Madhya Pradesh, the CAG noted.
The CAG said the ministry also inexplicably overlooked deficiencies in the certificate pointed out by a subordinate authority in the ministry while granting exemption in the instant case.