RPower scrip tanks 6% on CAG report

Reliance Power scrip tumbled about 6 per cent today after official auditor CAG said the firm got undue benefit of Rs 29,033 crore when the government allowed the use of surplus coal from blocks alloted to its Sasan power plant for other projects.

Besides, in another report, CAG named 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power, saying that they gained Rs 1.86 lakh crore from coal block allocations without competitive bidding.

Stock of some of these firms were down by about 4 per cent.

Shares of the Anil Ambani-led RPower pared initial gains and went into tailspin, falling 5.6 per cent to settle at Rs 87.70 on the BSE.

At the NSE, the stock lost 5.85 per cent to close at Rs 87.70.

CAG said that subsequent to the award of the 4,000 MW Sasan Ultra Mega Power Project to RPL, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group's Chitrangi project in Madhya Pradesh.

"This decision resulted in financial benefit of Rs 29,033 crore with a net present value of Rs 11,852 crore to the project developer (RPL)," the official auditor said.

Reacting to the report, RPL said, "Surplus coal has been made possible through use of advanced coal mining technology and large capital expenditure" and claimed no condition was violated "as the bid documents gave the right to the Government to permit use of surplus coal".

CAG has also said that private firms are likely to gain Rs 1.86 lakh crore from coal blocks that were allocated to them on nomination basis instead of competitive bidding, which amounted to the loss to national exchequer.

Following this, shares of Tata Power tanked 3.71 per cent, while Tata Steel was down 0.85 per cent, Hindalco (2.48 pc) and Jindal Steel and Power (4.02 pc).

... contd.

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