Companies & Sectors
Former top bureaucrat alleges fraud in grant of environment clearances for private power projects

EAS Sarma, former power and finance secretary writes to prime minister demanding project-by-project probe into the coal linkages for these projects and the dubious nature of the companies

Former power and finance secretary EAS Sarma has urged the prime minister to order an investigation into the granting of environment clearances for private power projects, as most of these have been secured by private companies through dubious means.

"The entire private power capacity in the pipeline is concentrated in the hands of a few influential industrial families who have formed a strong cartel to twist the arm of the government and its regulators, to reopen projects on highly questionable grounds," Mr Sarma said in his letter to the prime minister. He has alleged that the process of gaining power purchase agreements (PPAs) is opaque and fraudulent, and that the ministers concerned are all party to it.

Moneylife has reported on the huge number of power projects that have been approved by the ministry of environment and forests over the past five years. (Read, 'Thermal power generation: Clearance has been given for 2,00,000MW of additional power, but has the government considered the environmental consequences?')

"I have information with me to the effect that most of the private developers who have obtained environment clearances for such a large generation capacity have done so on the basis of dummy coal linkages," Mr Sarma says. Similarly, many of these companies have come up with dummy ash disposal agreements. A new clearance is required if a thermal power plant changes the quality of coal for its operations.

Mr Sarma said the Ministry of Environment and Forests should institute a realty check on the actual coal linkages vis-a-vis the linkage stipulated in the environment clearance and review all the clearances where there is a deviation. "While domestic coal has a higher ash content, imported coal has higher sulphur content. Either way, they affect the environment, though in different ways," he says.

Most of these private thermal power companies, Mr Sarma says, have invested illegally in coal mines and shipping contracts abroad, and they route money through dubious routes to fund their domestic operations. Mr Sarma had written to the cabinet secretary earlier, urging an inter-departmental team to investigate the issue. "A random check of the funding of some of these projects and the antecedents of those that cleared them will throw light on the above," he says. Mr Sarma believes that all the clearances that were granted during the tenure of A Raja as environment minister must be investigated.

Taking cognizance of Mr Sarma's complaint, Nelcast of Nagarjuna Construction Company (NCCL) was issued a notice by the environment ministry in December 2010 over its plans to change the coal linkage for the power plant it is setting up in Nellore district.

"The Ministry of Environment and Forests should undertake a project-by-project evaluation and bring down the number of new projects to a rational, environment-friendly and socio-economically acceptable level urgently," he says.

In view of this situation, the former IAS officer has urged the government to put an embargo on thermal project clearances, and rescind clearances for those projects which have seen little progress on the ground. "The clearances that have lapsed should not be renewed."


Reliance and BP commence strategic alliance for India

Reliance and BP will form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas

Reliance Industries Ltd (RIL) and BP today announced the completion of BP's acquisition of a 30% stake in 21 oil and gas production sharing contracts (PSCs) that Reliance operates in India, including the producing KG D6 block.

This significant step will commence the planned alliance which will operate across the gas value chain in India, from exploration and production to distribution and marketing. The completion of the deal delivers one of the largest ever foreign direct investments into India.

The two companies will also form a 50:50 joint venture for the sourcing and marketing of gas in India which will also accelerate the creation of infrastructure for receiving, transporting and marketing natural gas.

Mukesh Ambani, chairman and managing director, Reliance Industries, said "The alliance with BP will boost our efforts to realize the true potential of India's hydrocarbon reserves. The globally renowned expertise of BP and the in-depth domestic experience of Reliance make for a formidable alliance which will deliver unparalleled value for the country in its pursuit of energy security."

"This is the beginning of what we expect to be a long and successful working partnership with Reliance, building on the strengths of each company," said Bob Dudley, BP group chief executive. "This major investment is directly aligned with our strategy of creating long-term value by forming alliances with strong national partners, gaining material positions in significant hydrocarbon basins and increasing our exposure to growing energy markets."

BP will pay RIL an aggregate consideration of $7.2 billion subject to completion adjustments for the interests to be acquired in the 21 production sharing contracts. Further performance payments of up to $1.8 billion could be paid based on exploration success that results in development of commercial discoveries.

On Tuesday, RIL ended 3.64% up at Rs781.50 on the Bombay Stock Exchange, while the benchmark Sensex closed 1.59% up at Rs16,676.75.


Prime Comfort to invest Rs200 crore in three years

 Prime Comfort expects to achieve a turnover of Rs450 crore in the next three years on the back of new products and enhanced capacity during the period

Mattress maker Prime Comfort Products said it would invest up to Rs200 crore in the next three years to set up new plants and brand building.

The company, which became operational last year, said it expected to achieve a turnover of Rs450 crore in the next three years on the back of new products and enhanced capacity during the period.

"In the next three years, our total investment will be around Rs100 crore to Rs200 crore. This is will go on our capacity expansion, product development and other marketing initiatives," Prime Comfort Products Managing Director Praduman Patel said.

The city-based firm is planning to set up two more plants across the country in the next three years. While one of them will be set up in Gujarat and is expected to be operational by 2012, the company is planning to build another facility in South India.

"In the next three years, we want to have three plants across the country. We have started looking for land. One of them will come up in Gujarat and shall be operational by September next year," he said.

The company is planning to set up the third plant in South India, most probably near Hyderabad, he said but did not provide the timeline.
At present, the company has one facility at Greater Noida and has a capacity of making 10,000 tonnes of foam annually. It has already made an investment of Rs50 crore on the plant.

The firm plans to fund the investment through debt and internal accruals. However, the company said it would look for an IPO or foreign collaborations after two years when its business has stabilised.

"At present our focus is on building the brand and enhancing the distribution. We want our products to be available in around 3,000 outlets in next three years. At present, we around 1,000 dealers," Patel said.

According to the firm, the Indian mattress market is estimated to be Rs5,000-6,000 crore and is dominated by brands like Sleepwell and Kurl-On.

"We have to achieve a turonver of around Rs450 crore to be among the top three players in the sector. We expect that as we expand our capacity and business we will be able to achieve that in next three years," Patel said.

The company expects to close the fiscal with a turnover of Rs80 crore on back of its new product range launched under the brand name 'Refresh'.


We are listening!

Solve the equation and enter in the Captcha field.

To continue

Sign Up or Sign In


To continue

Sign Up or Sign In



The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)