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Coal block cancellation breaches bid contract: RPower to High Court

Reliance Power (RPower) on Tuesday told Delhi High Court that the Union government's decision to cancel one of the three coal blocks allocated to its Sasan Ultra Mega Power Project (UMPP) amounted to "breach" of the bid contract. Reliance Power in its petition has challenged the Centre's May 7, 2015, order to cancel allocation of Chhatrasal coal block which was allocated for Sasan UMPP. 

Opposing the government's decision before a bench of Chief Justice G Rohini and Justice Jayant Nath, Reliance Power (RPower) in its reply to the affidavit filed by the coal and power ministries said they had "assured availability of all three blocks to enhance confidence of prospective bidders". 

"The respondents (Coal and Power Ministries) assured availability of all the three blocks to enhance confidence of the prospective bidders, reduce their risk perception and to get good response to the competitive bidding. "The said assurances formed the fundamental basis of the bid and any subsequent unilateral alteration of the same amounts to the breach of the bid contracts," RPower said. 
 

Government had justified the cancellation saying the unit's coal requirement could be met by the other two mines, Moher and Moher-Amlohri extension coal blocks in Madhya Pradesh. Defending its decision, the government had said Reliance on several occasions had represented that its Sasan unit required only 16 million tonnes per annum which could be easily met by the two other blocks and hence, the third block — Chhatrasal — was deallocated. It had also said that the company did not fulfill the allocation condition of developing the Chhatrasal block and commencing coal production from there. 

Source: Economic Times