Anil Ambani led Reliance Power was awarded the Krishnapatnam Ultra Mega Power Project in 2007. The company furnished a guarantee of Rs 300 crore and a tariff for the project was fixed at Rs 2.33 per unit.
In 2012, Reliance Power stopped work on the project and when the government was about to cash the guarantee provided by the company, the latter got a ‘Court stay order’.
The company now has written to the AP government that it wants to exit the project citing escalated coal cost from Indonesia and a host of other factors.
According to Reliance, unless the central government allots domestic coal, the project would become unviable.
Did not Reliance, figure in possible fluctuations of coal prices in the international market at the time of taking on the project?
Did they not have the foresight to ensure through a contract with suppliers in Indonesia, a supply of coal at a fixed price prices to insure themselves against inflation?
So, if Reliance makes a profit they get to keep it and if they sense a loss, the government has to bail them out? Where then is involved, the risk inherent to all business?
The government should cash the performance guarantee provided by the company without any further delay. And the other Ambani, Mukesh is no exception either.
His KG Basin has turned out to be a hot bed of corruption with the laws frequently being tweaked to accommodate the interests of Reliance against the interests of the nation.
But there is little chance of expecting the AP government to act against Reliance for the company has huge investments in the ‘ETV group’.
By Kiran Sharma
