New Delhi: The Comptroller and Auditor General of India (CAG) has sought Power Ministry's reply on the issue of allowing Reliance Power to divert excess coal from its 4,000 MW Sasan project in Madhya Pradesh to its other project in the state.

"We have received CAG comments. We are examining them and we would reply to them soon," Power Secretary P Uma Shankar said.

While he refused to elaborate, sources said CAG had sent queries on the diversion of surplus coal from mines attached to Reliance Power's Sasan project to its another project -- Chitrangi in Madhya Pradesh.

Sources however refused to divulge the nature of queries or comments made by CAG saying the ministry was in the process of drafting a response which would be sent to the government auditor shortly.

Meanwhile, RPower in a statement to the BSE said, "To the best of our information, there is no CAG report on the decision taken by the Empowered Group of Ministers (EGoM) regarding use of incremental coal from coal blocks allotted to its Ultra Mega Power Projects."

The company's comments follow reports that CAG has raised some concerns on the issue.

RPower is executing the 4,000 MW Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh and is also developing a similar project in the nearby Chitrangi district for which the EGoM in August, 2008 gave its approval.

RPower is also executing two more UMPPs – Krishnapatnam in Andhra Pradesh and Tilaiya in Jharkhand. These projects are likely to be commissioned during the 12th plan period (2012-17).

The government had asked CAG to examine the surplus coal diversion issue at Reliance Power's Sasan and Tilaya projects.

Meanwhile, on the issue of gas allocation to power projects, Chaturvedi said, "We are of the belief that people who make money from subsidised gas (KG Basin) should not be given gas. We have submitted the proposal to the government and now it is considering it."

The Oil Ministry is mulling a ban on the supply of scarce domestically produced natural gas to merchant power plants.

As per the proposal, domestic natural gas, which is available at one-third the price of imported LNG, will only be supplied to companies that sell all power produced from this gas at regulated tariffs.