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Why Reliance Power was high on Niira Radia's agenda

Last updated on: October 24, 2013 11:24 IST

Why Reliance Power was high on Niira Radia's agenda

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Katya B Naidu in Mumbai

Niira Radia had said friends in high places enabled favourable EGoM decision on Sasan coal diversion, a charge staunchly denied by Reliance Power.

The Comptroller and Auditor General of India (CAG) was not the only one to have questioned the award of an additional coal mine to Reliance Power (R-Power) for its ultra mega power plant (UMPP) in Sasan, Madhya Pradesh.

Niira Radia, then corporate lobbyist for the Tata Group, among others, had also questioned how the company managed to get clearances for use of excess coal from the government.

Her conversation with a newspaper editor on the Sasan coal diversion was taped by the income tax department during 2008-09. These have now become the basis for the Supreme Court ordering a probe by the Central Bureau of Investigation (CBI).

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Image: Niira Radia.
Photographs: Courtesy, Business Standard

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Why Reliance Power was high on Niira Radia's agenda

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The alleged coal diversion by the Anil Dhirubhai Ambani Group (ADAG) was not the only issue bothering Radia. She also complained about the group’s plans to get iron ore mines without having any steel plant.

The Tata Group is one of the biggest investors in the steel sector and any allotment of ore mines to ADAG in Jharkhand would have impacted Tata Steel.

Earlier, the ADA Group’s application for iron ore mines, it was decided, to be left out of the probe due to lack of clarity in Radia’s taped conversations. 

However, the apex court has now referred this to the mines ministry and its chief vigilance officer to take appropriate action.

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Why Reliance Power was high on Niira Radia's agenda

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The ADA Group says it is not perturbed by the investigation. In a statement, it welcomed the probe, saying it would help prove they were victims of a mischievous campaign.

“The hollowness of the allegations is evident from the fact that we have not been allotted any iron ore mines, and we are in fact not in that business at all,” it said.

On the coal allocation and diversion from the Sasan project, R-Power denies claims of foul play.

“The use of surplus coal from the Sasan UMPP has been approved on two separate occasions by two EGOMs (Empowered Groups of Ministers), headed by the then finance minister, Pranab Mukherjee (now President of India),” it said.

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Photographs: Mukesh Gupta/Reuters

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Why Reliance Power was high on Niira Radia's agenda

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In fact, Radia’s clients, the three Tata Group companies and Reliance Industries (RIL), had a common rival at that time, the ADA Group.

R-Power won three UMPPs, pipping Tata Power while the Ambani brothers were (then) fighting a bitter battle.

Radia was not happy with the government's move to allow R-Power to divert excess coal from Sasan to set up a similar power project, Chitrangi. 

The relaxation to the rule was made after the auction for the project. A report by the CAG said R-Power’s windfall gains over the 25-year project life would be Rs 15,849 crore (Rs 158.49 billion).   

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Image: Mukesh Ambani and Anil Ambani.
Photographs: Reuters

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Why Reliance Power was high on Niira Radia's agenda

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Politically well-connected, Radia claimed Amar Singh, then a leader of the Samajwadi Party, had a say in the constitution of the ministerial panel which approved the coal use.

Singh was known to be a friend of Anil Ambani. This taped portion is the basis for the CBI probe.

Tata Power had, in fact, filed a case in 2009 at the high court (HC) in Delhi, questioning the move to allow R-Power to use coal granted for one project to be diverted to another.

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Image: Anil Ambani
Photographs: Reuters

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Its petition said the bid rules had been changed after the project was allotted. It also claimed that, had it known they could use extra coal, they would have bid lower and won that project.

This petition was, however, rejected by the HC, which said as Tata Power did not bid in the final round for the project, they could not question the move. 

The matter is now pending at the Supreme Court.


Image: Niira Radia.
Photographs: Reuters

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