PlanComm panel supports CAG view on usage of surplus coal from Sasan

Dec 07 2013, 02:44 IST
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SummaryReport is categorical that benefits of its policy should not be made available to merchant power plants.

A Planning Commission panel has supported CAG’s contention that surplus coal from Reliance Power’s Sasan project cannot be diverted to RPL’s 4,000 MW Chitrangi project at the producer’s terms.

“While allotting temporary surplus coal to power units, it may be clearly understood that the benefit of this will have to be fully passed on to the consumers. The coal from this, therefore, should only be permitted for those units which are under power purchase agreement (PPA) and have their prices determined by a regulator,” says the high-level committee headed by Planning Commission member BK Chaturvedi.

“The freedom to transfer coal to another power unit should be based on this stipulation only,” says the committee’s report. The Indian Express first reported that the CAG had alleged that the power ministry gave “undue benefit” of Rs 42,009 crore — spread over 25 years — to RPL in the Sasan ultra mega power project by changing the coal licence norms to allow RPL to divert surplus coal to its Chitrangi project. No PPAs have been signed for the project which is still in conceptual stage.

Since the coal use at the Chitrangi would fetch RPL a higher tariff of Rs 2.45 per unit compared to Rs 1.19 per unit for Sasan for which the coalmine was allotted, the CAG had recommended that the permission to use excess coal be reviewed as “no benefit on this account was passed to the consumers”.

The Chaturvedi committee, which considered the Attorney General’s view on surplus coal transfer from the Sasan project, has suggested that a “general policy” be framed for transfer of any excess coal from captive coal mining companies in the power, cement and steel sectors. “Such policy framework could allow general permission for transfer of surplus coal by any captive coal block user to another end-user of approved use,” it said, while adding that a surplus from “any existing captive block” (such as Sasan) to a new allottee “may be in the nature of a fresh allocation”.

The report is categorical that the benefits of its policy should not be made available to merchant power plants who sell electricity at unregulated rates to the customers.

“In such cases, they should be free to buy coal from e-auction or import coal and run their power business. To provide them coal from coal surpluses at Coal India prices, which are below the international prices, would be unfair and unjust”, it says. The

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