SPL, a special purpose vehicle created for development of Sasan Ultra Mega power project, was a wholly owned subsidiary of Power Finance Corporation (PFC) but in August 2007 it was transferred to Reliance Power Limited.
In its report on Compensatory Afforestation in India, tabled in Parliament, the government auditor said that SPL, according to guidelines and clarifications for diversion of forest lands for non-forest purpose under the Forest (Conservation) Act, 1980, had to provide equivalent area of 1384.96 hectare of non-forest land for the compensatory afforestation.
It noted that Madhya Pradesh chief secretary issued a certificate of non-availability of non-forest land in Sidhi district instead of a certificate of non-availability of non-forest land for the entire state.
"Based on this ineligible certificate issued by the chief secretary, the ministry exempted Sasan Power Limited from providing non-forest land of 1384.96 hectare in case of Ultra Mega Power Project and for the coal mining project in violation of the Forest (Conservation) Act, 1980," the CAG said.
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, it noted.
The CAG said that "not only did the ministry not exercise due diligence in ensuring compliance with conditions it also inexplicably overlooked the deficiencies in the certificate pointed out by a subordinate authority in the Ministry while granting exemption in the instant case."
"The 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."
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