Tata Power sues government over Reliance Power's coal diversion from Sasan

06 January 2009

New Delhi: The Tata Power Company (TPC) is reported to have taken the government to court over according permission to Anil Ambani's Reliance Power to divert coal from Sasan mines.

Moving the Delhi High Court against the government, TPC termed the government's decision as "arbitrary" and "illegal". The government had earlier decided in favour of allowing Anil Ambani's Reliance Power to divert coal from the captive mines of Sasan Ultra Mega Power Project for use in other projects.

TPC is also one of the bidders for the Sasan project. It has now asked the court to direct the government to produce all records, including the letter of intent (LoI) issued to Reliance Power on 1 August 2007 for the Sasan UMPP, and has sought documents of other consequential contracts entered into between them.

If the court accepts Tata Power's plea, the government could find itself producing documents pertaining to the power purchase agreement. TPC has said that the other bidders of the Sasan project were not aware of the provision to use coal from captive mines for other projects.

In its petition, TPC said that the "arbitrary and illegal" actions of the respondents, including the coal ministry and Power Finance Corporation (PFC), which granted the approval to divert coal from the captive coal mines of the Sasan UMPP to Reliance Power, the successful bidder, for use in other projects is contrary to the express terms of the bid documents disclosed to all bidders during the bidding process.

It says that the move effectively changes the "entire operating economics of Sasan UMPP."