Your edit “Releasing the captive” (May 1) contains certain factual inaccuracies and some omissions. First, we would like to point out that coal blocks to the Sasan and Tilaiya ultra mega power projects (UMPPs) were the only blocks allotted through tariff-based competitive bidding. All other coal blocks were allotted without bidding.
Now, for the facts:
1. Chitrangi does not sell power in the open market but through tariff-based competitive bidding.
2. Chitrangi competes with several captive coal blocks given to power companies. About 5 billion tonnes of coal have been allotted, sufficient for 37,000 Mw, so there is a level playing field.
3. The decision of the Empowered Group of Minister (EGOM) to permit use of surplus coal did not result in any undue benefit. Chitrangi’s tariff was independently evaluated by the Central Electricity Regulatory Authority in September 2010 and found to be 11 paise lower than CERC norms.
4. There is no diversion of coal meant for the Sasan UMPP; what is permitted is the use of incremental coal, after satisfying Sasan’s entire requirements.
5. There was no change in the bid conditions. All bidders knew of the existence of surplus coal and the government’s right to determine its use. This was reaffirmed by the ministry of power, the Delhi High Court, Attorney General and the Union of India before the Supreme Court.
Incremental coal production is a result of our deploying advanced mining technologies, at higher cost and more risk. Also, competitive bidding for power tariffs is the most suited mechanism for passing on the benefit of domestic coal to the consumer and the Sasan coal blocks are unique because they are subjected to bidding of power tariffs on two occasions (once for the UMPP and once for incremental coal).
Therefore, the EGOM’s decision encouraging the conversion of domestic coal to power on a competitive bidding basis is in the larger public interest. Any view that discourages domestic coal production would only lead to billions of dollars of coal imports while domestic coal remains buried underground.
Ashwani Kumar
President - Corporate Development
Reliance Power Ltd.
Delhi
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