Finance Dept vetoes Dadri project

LUCKNOW: The Rs 10,000 crore Dadri power project of Reliance Energy Generation Ltd (REGL) has come under cloud following serious objections raised by the finance department on favours showered by the Mulayam government. The State Support Agreement (SSA) between REGL and UP government "is a total sellout and surrender to REGL as many provisions of the state's new power policy and revenue components of the state were completely ignored while executing the agreement," says a senior official of the finance department. On the initiative of UP Development Council chairman Amar Singh and chief minister Mulayam Singh Yadav, REGL had proposed to set up Asia's biggest power plant — of 3750 mw installed capacity — at Dadri in Hapur tehsil of Ghaziabad district. Under the proposal, REGL is to supply only 1500 mw power to agencies appointed by the government while it would be free to sell remaining power to companies of its choice. About 2500 acre of land was to be acquired in seven villages for the mega project and the process was begun under section 4/17 of the Land Acquisition Act. An agreement was reached between Reliance, Delhi Power Private Ltd and UP government on February 19. It was followed by an agreement between Reliance and UP government on February 27. Several meetings were thereafter held between March and June to extract favours till the SSA was provided. In its objections, the finance department has categorically pointed out to the Mulayam government that "it was giving up claims on future revenue". Even though the land acquisition cost was to be shared by the UP government and REGL in 60:40 ratio, the latter managed to extract a major favour that "the increase in cost would be borne by the state". The REGL had fixed its share of Rs 4.8 lakh per acre on the total cost of Rs 12 lakh per acre to make it clear to the Mulayam government that it will have to bear the increase in the cost. "This is in clear violation of the state's power policy. The state government on its own was going overboard to bear the increase in acquisition cost," stated a finance department officer in his objections. Although the government has earmarked a sum of Rs 100 crore in its budget for 2004-05 but the sum is unlikely to meet the expenditure to be incurred on the acquisition of land. "Out of total 2500 acre, 2230 acre belong to farmers. The DM has fixed a rate of Rs 4 lakh per acre but it was doubled, meaning that it would put more financial burden on the state government," stated an officer. And, as per calculations the state government may have to bear Rs 108 crore of the total increased cost which is believed to reach Rs 180 crore. Moreover, the government has not made any budgetary provisions for creating infrastructure facilities at the Dadri site. About Rs 75 crore would be required for construction of roads, bridges and irrigation facilities. The finance department has also strongly objected to REGL being given relaxation in entry tax, trade tax and stamp duty for an unlimited period. "It is difficult to work out the figure at this stage but the state government cannot waive off these taxes without suitably amending laws," points out the officer. Add to it the furore among the power engineers over privatisation and the project assumes almost sinister proportions given that the government has not even made the agreement public.