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Mumbai, Jan. 5 Tata Power Company has moved court against the government’s decision to allow Reliance Power Ltd the use of coal from the captive mines allotted for the Sasan Ultra Mega Power Project, for other projects of the Anil Ambani- owned company.

A writ petition filed by TPC in the Delhi High Court prayed for the setting aside of the allotment of the Sasan UMPP to RPower. Alternatively, the petition said, the Government decision allowing utilisation of coal from the captive blocks for Sasan should be quashed; or RPower restrained from using the coal for any project other than the Sasan UMPP; or that the project itself re-tendered.

The issue arose when the Madhya Pradesh Government recommended to the Central Government the use of extra captive coal meant for Sasan UMPP for other projects of RPower. An Empowered Group of Ministers which considered the matter granted permission, provided the power so generated would be sold through tariff-based competitive bidding.

The petition by TPC (also a bidder for Sasan) noted that making available coal to RPower through captive blocks has a vital impact on the ‘energy cost’ part of the tariff. Bids are invited for projects in two ways; the first on the premise that land and captive coal blocks are made available to the bidder by the tendering authority. Here, under the energy cost part of the tariff, the cost of coal for the successful bidder is virtually reduced to the cost of raising or obtaining supply of coal, said the petition.

In the second type, bids are invited from different power generators who have to arrange for their own coal resources. In this case, the energy cost of the tariff would be calculated at market rates of the fuel. TPC’s petition said that a bidder who is allowed to use coal from a captive mine awarded under the first type of bidding for another project is put at a great advantage; he can under-cut all other generators and make a significant premium on the cost of coal captively raised by him from mines allocated under the first bidding process.

The change permitted to the structure of the Sasan project after award of the contract significantly alters the economics of raising coal, generating and selling power from the project, the petition said. If the structure were offered prior to the award of the contract it would have significantly altered the bids for the Sasan UMPP itself resulting in a significant saving of tariff and consequently significant benefit to the consumers of power, said TPC.

“Were it known to the petitioner that such a dramatic change in the very core of the structure of the Sasan UMPP would be permitted, the petitioner would have submitted a significantly different bid,” said the petition.

More Stories on : Power | Courts/Legal Issues | Coal | Tata Power Co. Ltd

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