In response to a report published in The Compass section of Business Standard on February 17 (Reliance Power: A long way to go), Reliance Power has sent a legal notice alleging that it contained several false, incorrect and misleading statements. The notice also alleges that the report was intended to create a negative impression about Reliance Power and cause damage to the interests of its shareholders.
This is to clarify that there was no such alleged malicious intent behind writing and publishing the report. Most observations in the article were based on conclusions drawn by reputed analysts in their reports. However, in the interest of fairness and with a view to sharing with our readers Reliance Power’s perspective on issues raised in the article, we are summarising below the company’s response. With reference to the report’s comment on the coal linkage for its ultra mega power plant in Krishnapatnam, the company has stated that the project will not suffer due to its dependence on imported coal because it has tied up offshore coal supplies from the coalmines it has acquired in Indonesia. It has also stated that the company’s Rosa power plant is operating at 105 per cent of the plant load factor (PLF) and not at 54 per cent as mentioned in the article.
Reliance Power has argued that its Rosa power plant uses Chinese equipment and this is contrary to the article’s suggestion that the experience of other power producers with Chinese equipment “has not been too good”. Moreover, Reliance Power has stated that there is no question of its Chitrangi power project using the coal meant for the Sasan power project. “Sasan’s mines have been approved to produce 25 million tonnes per year and Sasan’s requirement is of 14-16 million tonnes per annum. The production and use of coal will be in accordance with the mining plan approval given by the government and will in no way compromise Sasan power project’s requirements of coal,” it has stated.
On the progress of the Sasan power project, the company has stated that the target for commissioning it is from December 2012, which is three months ahead of the agreed schedule. Since the first unit of the Chitrangi power project is scheduled for commissioning towards the end of 2013, there is no question of using Sasan power project’s coal for Chitrangi. Also, there is no matter pending in the court that comes in the way of its implementation. A case pertaining to the use of Sasan coal for Chitrangi was filed in the High Court where it was not admitted and the matter has since been pending with the Supreme Court for the last one year. The courts have not passed any orders for staying the development of the projects, it has stated.
With reference to an analyst’s comment that Reliance Power’s total fund requirement is to the tune of Rs 140,000 crore during 2012-14, the company has stated that such estimates have been made without going into the schedules for execution of these projects and phasing of the funds requirements and internal accruals. Reliance Power has also added that the main contribution to its profit in the third quarter this year is from interest income earned on investment of surplus cash and a comparison with the numbers of the same period of previous year shows an increase in profit.