SPL, a special purpose vehicle created for development of Sasan Ultra Mega Power Project (UMPP), was a wholly owned subsidiary of Power Finance Corporation (PFC), but in August 2007 it was transferred to Reliance Power Limited.
The CAG report says that while SPL — as per the guidelines on forest land diversion for non-forest purposes — had to provide 1,384.96 hectare of non-forest land for the compensatory afforestation, the ministry exempted SPL from the requirement for both the UMPP and for the coal mining project in violation of the Forest (Conservation) Act, 1980 on the basis of an “ineligible certificate issued by the chief secretary”.
“Instead, SPL was allowed compensatory afforestation over double degraded forest land even though it was not eligible for such an exemption”, the report noted.
The CAG report on Compensatory Afforestation also points out how the Deputy Conservator of Forests, Bhopal during his site visit (for the coal mining project) in November 2008 had also mentioned that compensatory afforestation on double degraded forest land was not admissible on the basis of the certificate of the chief secretary for the Sidhi district.
“However, the ministry ignored his opinion and based on an ineligible certificate issued by the chief secretary exempted SPL from providing non-forest land in violation of the Forest (Conservation) Act 1980”, the report added.
The report observed that the ministry did not exercise “due diligence in ensuring compliance” and also overlooked the deficiencies in the certificate.
Responding to the allegation, a Reliance Power Spokesperson said: “The observations of the CAG regarding exemption given to Sasan Power... are misplaced and bereft of facts... Any increase in cost incurred on acquiring non-forest land for compensatory afforestation would have increased the cost of the project which in line with the bidding conditions, has to be borne by the power procurers from various states. This would have led to higher tariff for the power generated from the Sasan UMPP, which would eventually be borne by the consumer.”