Sasan Power Limited: Clearance by MoEF on the basis of “inappropriate certificate of the Chief Secretary and non-fulfilment of conditions of additional afforestation”

Sasan Power Limited (SPL) was a Special Purpose Vehicle (SPV) created for development of Sasan Ultra Mega Power Project (UMPP). SPL was a wholly owned subsidiary of Power Finance Corporation (PFC) but in August 2007 it was transferred to Reliance Power Limited (RPL).

In June 2007, the Government of Madhya Pradesh sought prior approval of the Central Government for diversion of 320.94 hectare of forest land for construction of UMPP of Sasan Power Limited in district Sidhi of Madhya Pradesh (Power Project). In December 2008, MoEF gave in principle approval for the project subject to fulfilment of various conditions. The final approval for the project was accorded in April 2009.

In June 2007, the Government of Madhya Pradesh sought prior approval of the Central Government for diversion of 320.94 hectare of forest land for construction of UMPP of Sasan Power Limited in district Sidhi of Madhya Pradesh (Power Project). In December 2008, MoEF gave in principle approval for the project subject to fulfilment of various conditions. The final approval for the project was accorded in April 2009.

Further, in September 2008, the Government of Madhya Pradesh sought the prior approval of the Central Government for diversion of 1,064.02 hectare of forest land for allocation of local Blocks for coal mining for Sasan UMPP under the East Sidhi Forest Division of Madhya Pradesh (Coal Mining Project). In November 2009, MoEF gave in principle approval for the project subject to fulfilment of various conditions. The final approval for the project was accorded in May 2010.

The following deficiencies were noted by CAG in permitting diversion of forest land in these projects:

According to guidelines and clarifications for diversion of forest lands for non-forest purpose under the Forest (Conservation) Act, 1980, SPL had to provide equivalent area of 1,384.96 hectare of non-forest land for the compensatory afforestation. As far as possible, the non-forest land for compensatory afforestation had to be identified contiguous to or in the proximity of Sidhi district and in the event that non-forest land for compensatory afforestation was not available in the Sidhi district, non-forest land could have been identified anywhere else in Madhya Pradesh. The non-availability of suitable non-forest land for compensatory afforestation in the entire State had to be accepted by the MoEF, only on the basis of the certificate from the Chief Secretary of Madhya Pradesh to that effect. However in both these cases, MoEF exempted SPL from providing equivalent area of nonforest land for the compensatory afforestation, on basis of the certificate from the Chief Secretary that no forest land was available in Sidhi District. MoEF did not ask SPL to furnish such certificate for entire Madhya Pradesh or make efforts for identification of non-forest land for compensatory afforestation anywhere else in the State. Instead, SPL was allowed compensatory afforestation over double degraded forest land even though it was not eligible for such an exemption. The Deputy Conservator of Forests, MoEF Regional Office (Central), Bhopal during his site visit (for Coal Mining project) in November 2008 had also mentioned that compensatory afforestation on double degraded forest land was not admissible on the basis of the certificate of the Chief Secretary about one district i.e. Sidhi.

However, MoEF ignored his opinion and based on an ineligible certificate issued by the Chief Secretary exempted SPL from providing non-forest land in violation of the Forest (Conservation) Act 1980. The MoEF not only did not exercise due diligence in ensuring compliance with conditions but also inexplicably overlooked the deficiencies in the certificate pointed out by a subordinate authority while granting exemption in the instant case.

Further, MoEF, while considering the coal mining project proposal noted, “in view of the substantial amount of good forest land being diverted, in addition to Compensatory afforestation, additional afforestation (not plantation) over an equivalent area of 991.81 + 72.21 hectare should be taken up by the project. This is the bare minimum special condition that should be added to the general condition.” MoEF did not insist for any firm proposal in this regard from the company.

Again, in July 2011, the Government of Madhya Pradesh sought prior approval of the Central Government for diversion of 965.40 hectare of forest land in favour of M/s Sasan UMPP for their Chhatrasal Captive Coal block (including 30.21 hectare forest land for infrastructure development) in district Singrauli of Madhya Pradesh. In November 2012, MoEF gave in principle approval for the project subject to fulfilment of various conditions including compensatory afforestation over the non-forest land equal in extent to the area of the forest land proposed to be diverted (i.e. 965.40 hectare).

The non forest land had to be transferred and mutated in favour of the State Forest Department. Further, to compensate the loss of good quality forests, in addition to creation of compensatory afforestation at normal rate, the company had to provide funds for rejuvenation and restocking of degraded forests, double in extent to the forest land proposed for diversion.

The final clearance to this project was still pending as the company was yet to submit compliance report to the conditions laid down by MoEF while granting in principle approval for the project. Thus, MoEF had insisted for compensatory afforestation over the non-forest land in latest project of the same company in nearby location in Madhya Pradesh, which clearly illustrates that in earlier two cases undue favour were extended to M/s Sasan Power Limited.

MoEF in its reply in (May 2013) was silent regarding the issue of clearance to SPL on the basis of an ineligible certificate of the Chief Secretary which was also objected to by the officials of the Ministry. It stated that SPL had submitted proposals for diversion of 1,064.02 hectare of forest land without clearly indicating its shareholding pattern and it appears that SPL did not bring to notice of the Forest Advisory Committee and the MoEF that it has been transferred from Power Finance Corporation (PFC) to the RPL.

Approval under the FC Act, 1980 for diversion of 1,064.02 hectare of forest land in favour of SPL was, accorded considering the SPL as a subsidiary of the Central PSU (i.e. PFC).

The MOEF reply, the CAG declared, was not tenable as Sasan Power Limited was transferred to Reliance Power Limited in August 2007 but the in principle approval was given by MoEF in December 2008 and the final approval was also accorded in April 2009. This was done on the basis of an ineligible certificate and by ignoring the reservations in this regard expressed by a subordinate authority.