As The Peat Burns
Until the digging begins, one never knows the quality of the coal (or any mineral, for that matter) the earth will yield. A similar mystery is now unfolding overground—how and why were so many companies allocated coal mines despite not meeting the requisite criteria of financial strength or clear end-use project for which the captive mine was sought?
Actually, perhaps it’s not that much of a puzzle. People say this is the way things are (and have been) when it comes to our natural resources. The result is Coalgate, a scam where everyone is complicit, political parties of all persuasions, business houses, bureaucrats, you name it. The only loser, it seems, is the Indian state. Ask former petroleum secretary T.N.R. Rao about the system and he’s blunt: “The real Coalgate is that when you allot a mine, there is a quid pro quo. The CBI must look beyond allocation and misrepresentation. For, there is a difference when a politician acquires the block and gives it to some company and when politicians receive kickbacks.”
Of the dozen or so cases the Bureau is currently investigating, many are based on complaints by coal ministry parliamentary committee member Hansraj Gangaram Ahir. “In at least three cases, the company management changed soon after they were allocated coal blocks for captive use. In several others, the end-use plant doesn’t exist and no attempt has been made to get the mining work started in the last 5-6 years,” he points out.
The five cases in which CBI has so far filed FIRs this week bears out Ahir’s plaint. Documents and other evidence collected from 10 locations revealed fraud in all cases—whether in misrepresentation of management, financial strength, plan for end-use project or even the intentions of those seeking a captive coal block. As the CBI’s initial probe reveals, the trail of muck runs deep.
It is indeed incomprehensible how despite a 15-20 member screening committee going through applications based on recommendations—and despite initial weeding out by state governments where the blocks are located—so many fraudulent cases were approved to mine valuable resources. Coal consultant U. Kumar says the problem is the lack of due diligence to verify whether the company seeking block allocation has the financial strength and end-use project.
Additional secretary, coal ministry, Zohra Chatterjee leaves an IMG meeting, Sept 3. (Photograph by Sajay Rawat)
The shocking part is that all this is happening while state-run Coal India Ltd is being pressurised to import coal to ensure supplies to private biggies, despite them holding captive mines. The list of biggies that have failed to make any progress with their captive mines include Rungta Projects Ltd, Contisteel Ltd, Dariwal Infrastructure Pvt Ltd, Dalmia Cement Ltd, Gujarat Ambuja Cement Ltd, Century Textile, J&K Cement Ltd, Birla Corporation, Benani Cement, Grasim Industries, Bhushan Steel Ltd etc.
Doubts naturally arise as to why governments, both at the Centre and the state, failed to monitor the progress of mining activity (or lack of it) and kept silent even when evidence was brought to its notice. “Clearly, due diligence was not done. This is a little odd because people are careful in these cases because of CVC and CAG questioning. Whether this was a lapse or done intentionally has to be ascertained,” says a coal official.
Take just one instance. In a showcause notice to Topworth Urja and Metals Ltd in May this year, the coal ministry had questioned the multiple changes in the management of Shree Virangana Steels Ltd, the original allottee of Marki Mangli-II, III and IV coal blocks for captive use. “The allotment of coal blocks by the government is for captive purpose and is not for profiteering.... The sale of shareholding for profit defeats the purpose for such allocation,” the official letter reads.
One of the cases that’s caused the government major embarrassment is of SKS Ispat and Power Ltd with which Union tourism minister Subodh K. Sahay has come to be associated to get a coal block allocated. Minutes of screening committee meetings in ’08 reveal that SKS was allocated coal provision for fuelling a 1,000 MW integrated power and steel plant though the company’s plant is of only 600 MW capacity
All this matters because of the dramatic rise in coal prices after 2004, led by Chinese demand (the price of a tonne of coal is currently around $99-102, as against around $25-30 before ’04). Coupled with the increasing demand at home, the stakes have obviously risen dramatically for this heavily politicised natural resource. And it does make sense to rely on cheaper domestic supplies of coal rather than expensive imports.
Which is why many are now forcefully arguing that the system needs to change. Instead of bank guarantees, U. Kumar moots upfront payment as in Australia. Mines should also take land on high lease to tackle land acquisition issues. Given all the heat and dust around Coalgate, it appears the government is serious about cancelling blocks where no work has been done. But will it also send the right signal by encashing bank guarantees of those who flout the rules?
Docu-drama The CMs who wrote in opposing the auctioning of coal blocks
By Lola Nayar and Chandrani Banerjee with Arindam Mukherjee
A politician by neither roots nor practice, our gullible prime minister has submitted to the tactics and manipulation of his party colleagues, bureaucrats and others hand in glove with big business (Dragline Blues..., Sep 17). He should be blamed for administrative incompetence—not corruption, as some think.
Pramod Srivastava, Delhi
We are ranked 95th on the list of corrupt nations. With ‘Coalgate’, I won’t be surprised if our ranking goes up. The immediate impact: foreign capital will be diverted to China.
Venkatesh Iyer, on e-mail
If it was merely a request (So What Does SKS Stand For?, Sep 17) that the PM intervene in the matter, and he did actually intervene, I think he is more to blame than those who made the request.
Narasimhan P., Bangalore
Apropos Dragline Blues (Sep 17), it’s obvious these shameless thieves will not be punished by law; in fact, they would be promoted. These guys ought to be paraded with their faces blackened on the streets. And to think officials take an oath when taking office to serve the country and its people. Shame!
A politician, neither by roots nor by practice, Man Mohan Singh, the gullible PM submitted to the ill-tactics and manipulations by his party colleagues who were supported by the corrupt bureaucrats to have the discretionary allotments of the coal blocks to a few. However, the PM may be blamed for an administrative incompetence but shouldn't be accused of corruption for himself as being alleged by some of his opponents.
Precisely my point! Except that I did not elaborate. BJP asks for cancellation as they were in no way (probably) involved in getting the mines for THEIR people (inspite of their Govt!). Obviously, some mud (or coal dust) would stick tpo them as well. But then three fingers will be towards Congress (and rightly so!).
I agree with your views on MMS. That Advani called him NIKAMMA was way ahead of time! The word though unsophisticated does prove Advani to be right...
Permitting captive mining for the power, steel and cement industries may have appeared to be a politically feasible way to dilute the rigours and limitations of nationalisation but the time has now come to allow a more open participation of the private sector in the coal industry.
If more than 90% of blocks are BJP ruled states, why is BJP asking for cancellation of all allotments (other than the demand for resignation of MMS- in fact MMS at the helm provides BJP with a punching bag!) ?
Any credible, rational answer? "
Dear as the PMO over ruled the recommendations of the States so why should BJP not protest as they don't ahv eto loose much.
So let all the dirt come out .BJP's face too will be blackened but Congress will be worst hit .If Supreme Court takes over which it should and will God knows how many will meet Raza-Kalmadi fate though both of them have been rehabilitated by Congress and DMK .
So don't Bother .Let both of them fight out .But the worst sufferer will be Congress because it can't take the stand now that not the Politicians but the Babus did .
It is the Degree of injury to each other that what BJP is looking at.
And then there is one Prem Gupta the Minister from Lalu's Party who too being a Central State Minister under MMS as Minister of Parliament Affairs during 2005 got a mine !
I am really very very sad that even Manmohan Singh has been trapped and pushed into an extremely vulnerable position by the corrupt Politicians ,Bureaucrats and Business Men .I was and still is his great admirer for the stand he took for the Nuke Pact and even risked his career by taking upon the Left .
There is no easy short cut for Congresswalas and its supporters blaming BJP for the mess .
PMO had over ruled the Recommendations of the State Govts and did not give the blocks to the those recommended by the States per the orders issued by the Chief Secretary Mr Nair after the meeting for going for discriminatory process Allocations by Screening Committee Method.
However Navin Jindal applied for one mine in 2002 and got it in 2003 from NDA on request of Odisa CM Navin Patnaik.
Hence the agitation by the Congress but which was botched up by Tytler as the crowd went after the Police and burnt Public property blew back .People now remember the horrible Picture and footage of the Women Constable being hit by the Congressi goons lying helplessly on ground crying for help .Mr Tyteler brazenly said 'Agar unke pass Photoes hein toh hammare pass bhi Photoes hein ' What else you will expect from a Genocide perpetrator of SIKHS in 1984 and still unpunished due protection he is receiving from the Rulers ??
A repeat of August 11 protest by the RAZA Academy and those Razas too are roaming free being the Vote Bank .
But in other instance two days before the case to go for Bidding was processed Navin Jindal and Tata got one Mine each . Though the Govt owned Companies with decades of experience in Coal mining were rejected without assigning any reason . This has happened during the UPA's Regime .
So what Congress and its supporters are harping at ?
And the Coal story does not end for Navin Jindal the Congress MP
who got the Coal dirt cheap and selling the Electricty at extremely steep Rates .Thus pocketing exorbitant PROFITS !
" Secret of Jindal’s success: Cheap coal, costly power
A case in point is Jindal Power Limited (JPL), a subsidiary of Jindal Steel and Power Limited (JSPL), owned by Congress MP Naveen Jindal.
Jindal case deflates govt's 'low-cost power' defence
Its coal-fired power project in Chhattisgarh's Raigarh district is the first ever project in India to operate on a 'merchant power' basis. This means that unlike other projects bound by tariffs fixed through long-term power purchase agreements (PPAs) with state governments, JPL is free to sell power at spot rates to any buyer in the market.
The company's 1000MW plant turned fully operational in 2008. Over the next year, it sold power at an average price of more than Rs 6 per unit. By 2010, the high returns had not only covered its running costs but also investments of Rs 4,338 crore. According to infrastructure experts, it takes a minimum of 5-7 years to repay debt incurred for capital investment in power projects. "
The full story as to how Jindal is reaping sky high Profits due Politcal patronge is above.
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