COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES

Bhadrawati Power Project: Ex-BJP MP calls Mittals' price-cut claim a lie

Congress leader and former Lok Sabha member Banwarilal Purohit has said that the Mittals of Ispat group have made a false claim that they have reduced the tariff by 18 paise per unit in the power purchase agreement with the state electricity board for their Rs 44.56 billion Bhadrawati Power Project.

Talking to newsmen in Nagpur, he said that leaving apart reduction, the Mittals had managed to get a rise of 23 paise per unit on what they had sought earlier, thus getting a further bonanza of Rs 1.82 billion per year for 20 years.

Purohit startled newsmen by circulating a copy of 1997 confidential note prepared for the Maharashtra Cabinet to substantiate his claim. He alleged that both the Bharatiya Janata Part-led Central government and the Shiv Sena-BJP coalition government in Maharashtra were involved in "this huge fraud on the public exchequer".

He said he would challenge the PPA in the high court in a separate writ petition . His earlier petition challenging the allotment of coal blocks near the ordinance factory and non-inviting of global tenders for the project has already been admitted by the high court which stayed the operation of the mining lease in favour of the Mittals.

Purohit was denying him re-nomination to contest the Lok Sabha poll for accusing party general secretary Pramod Mahajan of favouring Mittals in the process of obtaining clearance for their project as well as captive coal mines near the ordnance factory in Chandrapur district. Purohit subsequently joined the Congress.

Purohit quoted reports published in leading financial newspapers stating that the office of prime minister Atal Bihari Vajpayee prodded the power ministry for early grant of counter-guarantees for the Mittal project.

The state electricity board signed the power purchase agreement within two days of the Centre's sanction of counter-guarantees on August 1. Chief Minister Manohar Joshi and Deputy Chief Minister Gopinath Munde were present at the signing ceremony along with Ispat group's vice-chairman and managing director P K Mittal.

In a signed statement , Purohit said the claim of the two sides that the cost of the project and purchase price of power had been brought down during the negotiations was a blatant lie . "A fraud is being perpetrated on the people of Maharashtra to which now, along with the state government and Mittals, the Central government is a party, " he said.

Quoting from the confidential Cabinet note, he said the real levelised power tariff from the project should not be more than Rs 1.62 per unit at 15 per cent internal rate of return for the project as per the Central government norms.

He said the Cabinet note was clear that if the Mittals were to be granted an internal rate of return of 16.95 per cent, the power tariff should have been no more than Rs 1.69 per unit . At 15 per internal rate of return it ought to have been Rs 1.62 per unit which the United Front government was insistent upon.

The state then suggested another formula, granting an internal rate of return of 16.34 per cent which would have meant a tariff of Rs 1.65 per unit. Thus, at no stage, a higher tariff was considered .

To say that the rate of Rs 1.85 per unit was a reduced is nothing but a deliberate travesty of facts planned to accrue illegal benefits at the cost of tax-payers' money, Purohit said.

UNI