New Delhi/Mumbai: Nobody wants wages of fear from Coal India Ltd (CIL).
A tender floated by the world’s largest coal miner to appoint a consultant to study illegal mining closed on Monday without a single bid, showing the extent of fear among consultants to undertake a dangerous assignment that includes dealing with mafias, Maoists and corrupt government officials.
The only consultant that showed some interest in the project when the tender was floated on 30 April—Ernst and Young—shied away from bidding, an official in the company close to the tender process said on condition of anonymity.
“Maybe the terms and conditions were not suitable,” the official said. “Maybe the turnover required to qualify was too high. It has to be revised and refloated.”
The tender invited expressions of interest for selection of a consultant to assess the extent of illegal mining in the leasehold areas of three of Coal India’s subsidiaries—Bharat Coking Coal Ltd, Central Coalfields Ltd and Eastern Coalfields Ltd—and suggest corrective measures.
Mining coal. Photo: Bloomberg
Illegal mining and pilferage is a decades-old problem faced by Coal India, particularly in eastern India, and the latest attempt to cleanse the system comes after a terse report from a standing committee of Parliament tabled just days before the tender was floated in April.
“The best quality of coal is found in the reserves of eastern India, which is lamentably worst affected by illegal mining and theft. As the business of illegal mining has been thriving for decades in various states with the connivance of police, mafias, middle-men and administrative officials, the committee was inclined to conclude that the natural resources of the country are being plundered at the cost of national economy and destruction of environment,” the standing committee on coal and steel said in its report for 2011-12 on prevention of illegal mining and theft.
Coal ministry criticized
The report also contained comments from the ministry of coal on the action taken but the committee criticized its efforts as ineffective.
“From the action taken reply, it is gathered that the (coal) ministry is absolving itself from the responsibility of curbing illegal mining on the pretext that the law and order is a state subject and it is primarily the responsibility of law enforcing authorities of concerned state,” the report said.
Two analysts said illegal mining and pilferage was a socio-political problem and a risky job that did not fit the bill for established management consultants.
“In theory, you can appoint a consultant who can come and do its bit. In practice, the key question is how to plug the leakages firmly?” said Nirav Vasa, sector analyst with SBICAP Securities Ltd, adding that although illegal mining happens in majority of mining areas, the problem with respect to coal had got extra attention and traction due to the crisis in the power sector. “The problem is big for sure but it is hard to say if a public sector unit can tackle it without firm policy backing.”
Rough estimates suggest 0.5% to 6% of the company’s production each year is siphoned off at various transit points and sold to small industries in the black market. The standing committee report said abandoned old mines were also being mined illegally as they were not closed in the right manner.
Coal India has set a target of producing 468.74 million tonnes (mt) of coal in 2012-13 amid a difficult business environment where growth of mines is slow owing to land and environment problems while consumers such as power producers are demanding more of the resource with supply guarantees and discounts. Strident trade unions and natural calamities have been an additional burden. In 2011-12, the company produced 435.84mt of the resource, up just 1% from the previous year, failing to meet its target.
Little action on FIRs
A file photo of Coal India Ltd workers down in a mine
The standing committee highlighted the poor coordination between the state and the enforcement authorities in fighting the menace and berated the authorities for taking little action on first information reports (FIRs) being filed.
“Though the ministry is reported to have written to the coal producing state governments to undertake comprehensive review of the situation, assess the requirement of additional central paramilitary forces and issue appropriate directions to concerned authorities to take effective steps to check the blatant illegal and criminal activities in mining area, no visible results are forthcoming as the reports of illegal mining continue to pour in from different parts of the country,” it said. It said 616 FIRs were lodged during the last four years, but no information is available about the number of convictions carried out by the state authorities concerned.
“Even the coal companies have utterly failed in pursuing the FIRs and have left the matter to the mercy of prosecution authorities of the states. The legal department and vigilance of coal companies has also failed to discharge their duties... This is nothing but dereliction of their duties...”
Illegal mining have been reported in Coal India subsidiaries, particularly in Bharat Coking Coal Ltd, Central Coalfields Ltd and Eastern Coalfields Ltd, and 21,702 tonnes of coal was seized during the last four years. Only one officer has been suspended by the management for lacklustre attitude towards curbing illegal mining, it said.
Roles of NGOs, college
The official close to the tendering process said on an earlier occasion XLRI School of Business and Human Resources in Jamshedpur had shown interest in undertaking such a study owing to their local presence and understanding of the unique social problems in the eastern India.
“There could also be some non-governmental organizations that could do a good job,” the Coal India official said.