Probe ordered into land allotment to Hinduja Power Corporation in Visakhapatnam

Company failed to set up power plant even 10 years after it took possession of site

The Public Accounts Committee (PAC) of the Andhra Pradesh Legislative Assembly has taken serious exception to the allotment of land to the Hinduja National Power Corporation Limited ( HNPCL) by the state government. The committee set up a panel last week to look into the details of the land allotment and submit a report.

The state government entered into an agreement with HNPC on 15 April 1998 and allotted 454.2 hectares of land to HNPCL in Dewada village in Visakhapatnam district in May 1999 for setting up a 1,084 MW coal-based thermal power plant. The deal was fixed at Rs 26.63 crore. The agreement stipulated that financial closure of the project should be achieved within 12 months of the date of agreement and the power project should be completed within 44 months from the date of financial closure. The company paid only 16.42 crore.

Glaring lapses

The state government did not ensure that the allotted land was utilised for the purpose for which it was allotted. When HNPCL failed to set up the proposed power project, the government should have taken back the allotted land back. It failed to do that. Instead, it sold the land to the same company at rates lower than the market rates
Government ignored the requests of public sector units like APGENCO and NTPC for allotting the same land given to HNPCL. NTPC’s request to allot a part of the land to it for the expansion of Simhadri Extension Project was ignored
APTRANSCO’s requests for inviting open bids from private companies were ignored
The government neither availed the competitive rates of power tariff offered by public sector units nor did it opt for competitive bidding to get better price for the land
Legal advice pointed out that the contract with HNPCL was no longer binding because the company failed to pay the full cost of the land and did not fulfill the conditions was ignored

Private interest v public interest

National Thermal Power Corporation (NTPC)