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R-Adag gains as UPA govt changes rules

R-Adag gains as UPA govt changes rules
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First Published: Thu, Aug 14 2008. 10 42 AM IST

Updated: Mon, Sep 08 2008. 02 48 PM IST
New Delhi: In a controversial move, the United Progressive Alliance, or UPA, government on Thursday effectively amended the norms for so-called ultra mega power projects, or UMPPs, making it possible for a developer to use surplus coal from captive mines allocated for this project for other projects being developed by it or its affiliates.
The immediate beneficiary will be the Reliance-Anil Dhirubhai Ambani Group, or R-Adag, which had asked the government for this concession.
Sections of the government expressed their reservations against the move, especially since it appears to indicate a willingness to accommodate the demands of the Samajwadi Party, or SP—its general secretary Amar Singh is considered close to Anil Ambani, chairman of R-Adag. The government survived a 22 July trust vote in Parliament largely on the back of support extended by the SP after the Left Front withdrew support over the Indo-US nuclear deal, which it is opposed to and which the government wants to push through. The government has denied it was pressured to take the decision, but one SP leader indicated otherwise.
Thursday’s decision was taken by an empowered group of ministers, or eGoM, on UMPPs, comprising power minister Sushil Kumar Shinde, finance minister P. Chidambaram, law and justice minister H.R. Bhardwaj, science minister Kapil Sibal and deputy chairman of the Planning Commission Montek Singh Ahluwalia. Decisions taken by such ministerial groups do not need to be ratified by the cabinet.
In a 14 August story, Mint reported two government officials as saying that the three blocks identified to supply coal to the Sasan UMPP being developed by R-Adag group company Reliance Power Ltd did not have any surplus coal.
On Thursday, Shinde said it “is for the coal ministry to decide whether there is surplus coal or not”.
The government said that such surplus coal would be that available after the UMPP in question reached its peak capacity of around 4,000MW. One government official who did not wish to be identified said that the only change the government had made was in the terms under which captive coal blocks were allotted to UMPPs.
This, however, effectively translates into a change in UMPP norms because earlier coal from blocks meant for a UMPP could not be used by the developer for its other power projects.
Apart from developing the 4,000MW power plant at Sasan in Madhya Pradesh, Reliance Power is also developing the 4,000MW plant at Chitrangi, also in the state. The company has agreed to sell power generated at Sasan at Rs1.19 a unit, while it plans to sell the power generated at Chitrangi at Rs2.45 a unit.
The ministerial group’s decision means that new UMPPs with captive coal blocks, such as the one at Tilaiya in Jharkhand, will also be free to use surplus coal from captive blocks meant for these projects, in others.
An R-Adag spokesperson declined comment.
“We have not taken this decision under the pressure of the SP or anyone. The developer (Reliance) has been asking for this permission for the last six months. I do not think that this decision goes against the UMPP norms. If there is any surplus coal, it can be used for other projects, provided they supply power on a tariff reached through competitive bidding,” said Shinde.
The meeting of the ministerial group on Thursday was its first after the government won the trust vote.
“This entire thing is unacceptable. It will create future problems,” said a minister in the government who did not want to be named. He did not elaborate on the “problems”.
Mohan Singh, a senior SP leader who had told Mint on Wednesday that his party was not lobbying the government to allow Reliance Power to use surplus coal from blocks meant for Sasan elsewhere, qualified his stance on Thursday and said: “I never said the SP has not put pressure on the government, I only said I have not put pressure on the government in this matter.”
The Left Front, which has been attacking the UPA on all counts in the run-up to and after the trust vote, and the Bharatiya Janata Party, the main opposition party, decried the move.
“With corporate groups like Anil Ambani’s Reliance supporting the government apart from the SP, the government is now obviously returning the favour,” said D. Raja, national secretary, Communist Party of India. “This is yet another item on the agenda being pursued by the Congress for the sake of continuation in power by putting all norms aside,” said Prakash Javadekar, a BJP spokesperson.
Krishnamurthy Ramasubbu contributed to this story.
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First Published: Thu, Aug 14 2008. 10 42 AM IST