Rajasthan electricity consumers pay more due to the state company’s coal deal with Adani Enterprises

30 April 2019
Electricity consumers in Rajasthan are paying at least Rs 0.30 more per unit of electricity than what they would pay if the RRVUNL was buying coal at the standard notified price.
Courtsey Rajasthan Government
Electricity consumers in Rajasthan are paying at least Rs 0.30 more per unit of electricity than what they would pay if the RRVUNL was buying coal at the standard notified price.
Courtsey Rajasthan Government

Electricity consumers in Rajasthan are bearing the brunt of the state power corporation, Rajasthan Rajya Vidyut Utpadan Nigam Limited, or RRVUNL’s refusal to cancel a decade-old coal mining and delivery agreement with its private partner, Adani Enterprises Limited. In 2007, the two companies formed a joint venture called the Parsa Kanta Collieries Limited, or PKCL. PKCL mines the coal and sells it to RRVUNL. As a result of this agreement, RRVUNL is incurring an additional expense of Rs 600 per tonne of coal, according to an intervention application filed in the Supreme Court by Sudiep Shrivastava, a Chhattisgarh-based activist and advocate, in March 2018. The application states that based on an estimated coal production of 10 million tonne per annum, “RRVUNL is spending almost Rs 600 Crore extra to get its own coal.” To account for these expenses, RRVUNL passes on the excess cost to the distribution companies, who, in turn, pass it on to consumers in Rajasthan.

In March 2018, The Caravan reported that according to the RRVUNL’s documents, it was paying an excess of Rs 270 per tonne of coal delivered to the power plants, resulting in an estimated loss of over Rs 6,000 core over the 30-year lease period. However, Shrivastava’s application before the apex court estimated that the loss from PKCL’s overpricing of coal for the 30-year period amounted to an even higher sum of Rs 21,720 crore.

Shrivastava had filed his petition as part of an ongoing case in the court pertaining to what is known as the “Coalgate” scam. In 2014, in a landmark verdict connected with the Coalgate scam, the Supreme Court cancelled almost all the coal-blocks allocated to public sector companies. The court ruled that 214 out of the 218 coal block allocations since 1993 were illegal. It also found that private companies were benefitting from the coal-block allocations to public-sector undertakings because the prevailing joint ventures and mining agreements allowed the private companies to profit from mining coal allotted to the PSUs. The judgment nullified the joint ventures and mining agreements between the PSUs and private companies. Yet, RRVUNL continues its partnership with the AEL in violation of the apex court’s order.

In 2015, when the central government reallocated the coal mines, RRVUNL was allotted the Parsa East and Kanta Basan block in Chhattisgarh. The coal ministry had earlier allotted the block to RRVUNL in 2007; it was deallocated as per the Supreme Court order, and allotted again to the same company in 2015. Coal from the PEKB mine is being used for power production at units five and six of the Chhabra thermal power plant, units three and four of the Kalisindh power plant, and units seven and eight of the Suratgarh thermal power plant in Rajasthan. The state PSU could use coal from its allotted block to fuel its local power plants and provide electricity at lower rates than the prevailing price. But according to calculations by The Caravan based on publicly available data and Shrivastava’s estimates, consumers in Rajasthan are paying at least Rs 0.30 more per unit of electricity than what they would pay if the RRVUNL was buying coal at the standard notified price. The standard notified price is a benchmark price set by the coal ministry based on the grade of coal being bought.

Documents that the RRVUNL has filed with the Rajasthan Electricity Regulatory Commission—including preliminary information memorandums and tariff petitions—show that the power corporation is paying a higher amount than the notified price. Shrivastava also argues that the data disclosed in the PIM shows that RRVUNL is paying more than the Coal India Limited’s notified price. This is despite the fact that the RRVUNL should only be paying the mining charges, as the coal block has been allotted to the PSU.

Keywords: Coal mining Adani Enterprises Limited Sudiep Shrivastava Rajasthan electricity
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