Coal block controversy: A news round-up

Coal block controversy: A news round-up

10 September, 2012

In a release issued Monday afternoon, the Union coal ministry said that the inter-ministerial group looking into the coal block allocations will meet at 3 pm on 12 September to deliberate and finalise its recommendations regarding allotees/companies that made presentations before it.

The presentations were made by the allotees of 29 coal blocks after show- cause notices were issued to them, the release said.

Meanwhile, Union law minister Salman Khurshid on Monday sought to once again defend the government on the issue of coal block allocations.

At a press conference on Monday, Khurshid said that all allocations were as per the procedure adopted by the screening committee and that the Prime Minister had “nothing to do" with the procedure that the screening committee adopted for allocating coal blocks.

He said that there was no delay in the procedure being adopted to auction the blocks. “The question is if during the time taken for deciding on auction, if we should have stopped allocating coal. However we felt supply should be uninterrupted, because of rising demand. We continued under the screening committee," Firstpost quoted Khurshid as saying.

He said that Orissa chief minister Naveen Patnaik personally retested allocation of coal block to Jindal and that none of the the chief ministers disagreed with the govt process.

“Of the 57 blocks referred to in the CAG report, 20 of those blocks are for the power sector. As far as these are concerned, they cannot be auctioned because there is a tariff through competitive bidding," NDTV quoted him as saying.

In an interesting story, DNA newspaper reported Monday that the Manoj Jayaswal-controlled Abhijeet Group, which is in the eye of the storm over coal block allocations, got loans worth Rs22,000 crore to develop power projects.

“His group leveraged the free booty by proposing power projects and got Rs22,000 crore of loans sanctioned from various banks. Of this, Rs11,000 crore has been disbursed with no project near commissioning, and that could be the beginning of bigger problems for lenders," the report said. “Monthly interest payments along with salary and administrative expenses run into huge sums, between Rs100 crore and Rs110 crore, for the Abhijeet group."

“According to a former employee, in 2008, Abhijeet Group had only three active projects—Corporate Ispat Alloys (CIAL), which ran a 36 MVA ferro alloy plant in Durgapur and had a topline of Rs298 crore and bottomline of Rs13 crore in 2008-09; Jas Toll Road Company, which operated a 32km section of NH-4 between Neelamangla and Tumkur near Bangalore in which Abhijeet Group divested 33% to IDFC for Rs65 crore; and a bridge toll project operated in Bhandara, called Ashoka Infrastructure, which had a daily collection of Rs2.5-3 lakh and where Abhijeet Group owned just 50% stake," the report further noted.

Even as the inter-ministerial group looking into coal block allocations looks set to submit its report, a missive by the department of economic affairs (DEA) in the finance ministry could make revoking allocations tougher.

The Economic Times newspaper said Monday that last week the DEA had told the panel that “any recommendation to de-allocate blocks should take into account views of the ‘end-user ministry’ as well as financial implications."

“The concern expressed by the DEA could potentially increase the complexity of the IMG’s task as the coal ministry is determined to abide by a 15 September deadline set by the Prime Minister’s Office to act against companies that have not done much to develop mines," the report said.

The Business Standard newspaper said minutes of several government meetings at the time of allocations, reviewed by it, showed that disagreements between various ministries had led to “hasty vetting of coal applicants’ credentials".

“The deliberations show the buck was passed when it came to checking the authenticity of the details provided by companies and finally a quick verification was done by the state governments," the report said, citing government documents.

Meanwhile, Mint reported on Monday that the government allotted blocks for coal-to-liquid (CTL) projects proposed by Jindal Synfuels Ltd (JSFL) and Strategic Energy Technology Systems Pvt. Ltd (SETSPL) based on the recommendations of an inter-ministerial group (IMG) led by Kirit S. Parikh, who was then member, energy, at the Planning Commission.

9 September, 2012

New Delhi: The Central Bureau of Investigation (CBI) could soon name officials of the Union coal and power ministries and officials of state governments, who it believes were directly complicit in the fraudulent allotment of coal blocks.

The Hindu newspaper, citing highly placed unnamed government officials, said that CBI could name officials involved in the allotments in the next round of first information reports, that the agency will file soon.

“Highly-placed government sources said the next round of FIRs to be lodged by the CBI could actually name the officials who were part and parcel of this conspiracy and had joined hands to suppress facts pertaining to these companies, their standing, holdings and financial transactions. Certain officials of the Screening Committee, the Coal Ministry, the Ministry of Power and other administrative machinery deliberately overlooked the misrepresentation of facts by the tainted companies, they added," the report said citing officials.

“ “Enquiry also revealed that officials of the Ministry of Coal, in pursuance of the criminal conspiracy, failed to carry out scrutiny of the aforesaid documents regarding the false claims/concealment of facts by JLD Yavatmal Energy Ltd for which the company got undue advantage in allocation of the Fatehpur East coal blocks," the FIR filed by CBI on September 3 states," the report further said.

On Sunday, The Economic Times ran a story analyzing how corruption in the coal sector “extends beyond" the present controversy surrounding the allocation of coal blocks.

The report details how inefficiencies the government owned Coal India Ltd (CIL), the world’s largest coal miner have kept the coal sector back.

“Firstly, it had problems in ramping up production from new blocks because of a lack of rail linkages. The rail links needed to ship coal from these new blocks to consumption centres have not been built despite several back-and-forth discussions by the railways and coal officials. As a result, several thousand tons of coal dug out of the ground simply languish at the pits for want of adequate transport," the report said.

“The other problem in developing new blocks was the ‘go/no-go’ controversy. CIL had asked the environment ministry to distinguish between heavily forested areas where coal mining was unlikely to be ever allowed and less forested areas where mining approvals could be accelerated—CIL alleges that the latter approvals never came through," it added.

The report further detailed how there is no clarity on India’s total coal reserves, as “the estimate also includes coal that “has been extracted and burnt during the past 200 years (estimated at about 10 billion tonnes)" “.

Interestingly, on 28 August, Minthad reported on how a national security panel, led by former cabinet secretary Naresh Chandra had recommended that CIL be “split up" to foster competition in the sector.

“Coal India Ltd, being a virtual monopoly under government control, has not allowed open competition to prevail in the coal sector. This has inhibited improvement of efficiencies and modernization in this important sector, so vital to our energy security," the panel’s report said. “Maintaining government monopoly in this area might not be the best model for the long-term development of this sector."

After several other political heavyweights facing a probe in the coal block allotment scam, former Jharkhand chief minister Madhu Koda, too, could come under the scanner. The Economic Times reported Sunday that Koda had recommended 13 coal blocks for allocation to private companies. Citing unnamed sources in the Central Bureau of Investigation, the report said that Koda had recommended “dummy companies" formed just before allocation.

“The agency has already registered five FIRs in the Coalgate scam. Koda and other state representatives who attended the meetings in connection with two private companies—Vini Iron and Steel Udyog Ltd—which got the Rajhara (North) coal block and have been booked by the CBI, are already under the agency’s scanner and will be questioned soon," the report said.

Interestingly, The Indian Express too ran a story on Sunday, that traced Koda’s links to the coal block allocation issue. “Koda, an MP now, is currently in jail in a money laundering case and sometimes attends Parliament while in custody. Just a few days ago, the CBI raided the residence of one Vijay Joshi, owner of Vini Iron and Steel Udyog Ltd, in connection with the coal block allocations. Joshi is widely believed to be a shadow for Koda," the report said.

Meanwhile, The Indian Express newspaper, on Sunday, profiled the Nagpur based Darda brothers—Vijay and Rajendra—and their family, and traced their rise from relative obscurity. Besides interests in the media business—they promote the Lokmat group—the brothers also promote Jas Infrastructure Capital Pvt. Ltd along with Manoj Jayaswal, whom Mint profiled on Saturday.

“In the early 2000s, another controversy hit the Dardas. After the Kargil war, the Lokmat Group launched a fund for Kargil martyrs’ kin, collecting donations that ran into crores. A hostel was built for the wards of the victims, raising questions about how many would actually be able to use it since the martyrs were from all over the country and their children, then very young, were unlikely to come to Nagpur," the report further said. “Vijay Darda, meanwhile, got close to Manoj Jayaswal, who heads the Abhijeet Group that’s also headquartered in Nagpur and who too now stands accused in the coal block case. In fact, when Manoj Jayaswal parted ways with his family a couple of years ago, it was attributed to his friendship with Vijay Darda."

The inter-ministerial group (IMG) looking into coal block allocations has finished quizzing companies that were allotted the blocks and is likely to submit its report to the coal ministry on Monday. The report is likely to be submitted to the Prime Minister’s Office before 15 September.

“All the coal blocks on agenda for three days (September 6-8) have been reviewed," the Press Trust of India (PTI) cited Zohra Chatterji, additional secretary in the coal ministry who headed the panel, as saying on Saturday.

“During the three-day IMG meeting, all the 29 allottees gave progress reports of their blocks and several of them said delays in starting the production resulted due to lack of various clearances from different state governments. Coal block allottees, including Tata Steel Ltd, Reliance Power Ltd, JSW Energy Ltd, Grasim Industries Ltd, Kesoram Industries Ltd, IST Steel and Power, SKS Ispat and Power Ltd, Bihar Sponge Iron Ltd, appeared before the panel during IMG’s three-day review exercise," the PTI report published by The Hindu newspaper said.

8 September, 2012

Countering the allegations made by the Bharatiya Janata Party (BJP) on the issue of coal block allocations, and its demand for the Prime Minister’s resignation, Union minister Kapil Sibal demanded on Saturday that the BJP should ask its state chief ministers to resign since mining lease allocations are decided upon by state governments.

“The basic question is that who executes the lease," PTI cited Sibal as saying at a press conference. “BJP men, who are leveling allegations, should be asked to get resignation of their CMs that why they executed the lease," he told a news conference, the news report said. “Because the responsibility was theirs (since) they executed the lease and decided that in whose favour it would be done," he claimed, the PTI report carried on added.

The CBI is likely to question Congress member of Parliament Vijay Darda, his brother Rajendra and Manoj Jayaswal of the Abhijeet Group, CNN-IBN news channel said Saturday,citing unnamed sources. Jayaswal is likely to be quizzed in Nagpur, the report said. It added that “government officials who connived with the Jayaswal group and overlooked details, were being probed as well".

The DNA newspaper reported on Saturday that farmers in a Chhattisgarh village had resolved to form a coal mining firm of their own and “take on the rapacious companies exploiting their lands".

“The resolution to form their own firm is the fallout of a five-year battle with Congress MP Naveen Jindal’s mining firm, Jindal Steel and Power Ltd (JSPL), that was trying to start operations in the area," the DNA report said. “The matter had reached the Green Tribunal, which cancelled the environmental clearance given to JSPL and pulled up the ministry for environment and forests for not following the ‘proper procedure’," it added.

In an interesting turn of events, senior Delhi government officials may appear on Saturday before the inter-ministerial group looking into the coal block allocations. The Indian Express newspaper reports that the panel headed by additional coal secretary Zohra Chatterji will on Saturday ask the Delhi government why a block allocated to it in Madhya Pradesh remained unexplored for six years.

The Delhi government was allotted the Mahan-II block in 2006, along with the Haryana Power Generation Corp. Ltd, the newpaper said in its report. This is the first time a Congress party-led government is being called to testify on coal blocks, the report added. The panel is likely to take a call on taking back the blocks on 15 September.

Meanwhile, the Business Standard newspaper said the coal ministry is likely to ready its response to the Comptroller and Auditor General’s (CAG) report on coal block allocations by 14 September. The report said the coal ministry is likely to counter the CAG’s arguments on at least five counts—calculating the quantum of extractable reserves in blocks based on averages, cost of coal production and how it varies geographically, geological constraints in mining, taxation offsetting a part of financial gains extended to companies, and valuation of captive coal blocks vis-à-vis the price of coal set by Coal India Ltd.

Meanwhile, Mint on Saturday profiled 57-year-old Manoj Jayaswal, who heads the Abhijeet Group, which has been named by the Central Bureau of Investigation (CBI) this week in its ongoing probe into irregularities in the allotment of coal blocks. The report details how the Abhijeet Group grew in record time.

CNN-IBN news channel ran a story on Hansraj Ahir, a Bharatiya Janata Party member of Parliament from Chandrapur, Maharashtra, who, the channel said, was the first to raise concerns about the coal block allotments in 2005 when he wrote a series of letters to Prime Minister Manmohan Singh and then coal minister Shibu Soren between 2005 and 2007, but got no response. The Congress, however, refutes Ahir’s role, the channel said. “We can’t say he exposed it," it cited Congress leader Harish Rawat as saying.

7 September, 2012

The political battle over the coal allocation issue continued Friday with Prime Minister Manmohan Singh blaming the Bharatiya Janata Party led opposition for a “wasted session of Parliament."

“I feel very strongly that this is making a mockery of parliamentary democracy," the Prime Minister said in a message released after the last day of the current session of Parliament was also stalled. “We do incalculable damage to the reputation of India’s Parliament if we resort to disruption of Parliament to make a political point."

“Those who prevent Parliament from functioning, disable the voice of the people. They take away their right to hear their representatives debate issues in a reasoned manner when the case for and against a point of view can be heard. They force them to listen instead only to voices in the street, which is not the place for reasoned discourse. This is the road to a dysfunctional politics which will only produce agitational politics and a deeply divided and disenchanted country," he said.

Bharatiya Janata Party leaders Sushma Swaraj and Arun Jaitley reiterated that the party will take the fight on the coal allocation issue to the streets. This came after the monsoon session of Parliament was washed because of the opposition’s protests.

“The UPA (United Progressive Alliance) is a regime which is committed to kleptocracy," Jaitley said at a press conference in New Delhi. “Let the Centre have a commission of inquiry where the Prime Minister has to come and depose how he conducted the affairs of the coal ministry," Jaitley added, demanding an independent probe into the allocations.

Swaraj termed the inter-ministerial group looking into the allocations, an “eyewash."

The month-long monsoon session of Parliament was washed out due to the protests over the coal block allocation issue. The session ended today.

Earlier in the day, the BJP-led National Democratic Alliance had protested inside the Parliament complex.

“The PM is the head of this corrupt coalition government. And if the PM is let off then no one else would fear the law. BJP won’t let the PM go scot free," CNN-IBN cited BJP leader Mukhtar Abbas Naqvi as saying.

At least two more political heavyweights—former corporate affairs minister Prem Chand Gupta of the Rashtriya Janata Dal, and junior minister for information and broadcasting S. Jagathrakshakan of the Dravida Munnetra Kazhagam (DMK)—could come under the scanner after media reports said that they or their kin benefited from the coal block allocations.

In a front page story on Friday, The Economic Times newspaper said that IST Steel and Power, a part of the IST Group promoted by Gupta’s sons Mayur and Gaurav, was allotted a coal block in Maharashtra. Gupta, however, denied having benefited from the allocations, the report said.

In another report, Hindustan Times newspaper said that Jagathrakshakan may come under scrutiny as his company JR Power Gen Ltd had formed a joint venture with the Puducherry Industrial Promotion Development and Investment Corporation, which had been allocated a coal block in Talcher in Orissa, in 2007.

“As of February 6, 2008, Jagathrakshakan, wife J. Anusuya, son J. Sundeep Anand and daughter J. Srinisha are shareholders of JR Power Gen, holding a total of 10,000 shares and 49%. KSK Energy Ventures Ltd holds 10,410 shares (51%). JR Power Gen is an unlisted company and has not completed any public or rights issue since the date of its incorporation. These details did not find mention in Jagathrakshakan’s details in the list of assets and liabilities by Lok Sabha members as of August 31, 2012," the report said.

These revelations come, after the names of three leaders belonging to the Congress party--Subodh Kant Sahay, Vijay Darda and his brother Rajendra Darda--and one to the principal opposition Bharatiya Janata Party, Ajay Sancheti, have already surfaced.

Interestingly, another report in The Economic Times on Friday said that the Central Bureau of investigation, the Comptroller and Auditor General and the Central Vigilance Commission could co-ordinate their actions over the investigations into the allocations of coal blocks. This, even as several companies have already been deposing before the inter-ministerial group, which is looking into cancelling the allotments and likely to submit its report by 15 September.

Meanwhile, in a near total washout of the month-long monsoon session of the Lok Sabha, the house was adjourned sine die, after the opposition, led by the BJP, continued to demand the resignation of the Prime Minister over the coal block allocation issue.

Earlier in the morning, the BJP-led National Democratic Alliance began protesting inside the Parliament premises.

“The PM is the head of this corrupt coalition government. And if the PM is let off, then no one else would fear the law. The BJP won’t let the PM go scot-free," CNN-IBN quoted BJP leader Mukhtar Abbas Naqvi as saying.

6 September, 2012

For the 12th straight day, Parliament on Thursday was disrupted over the issue of coal block allocations.

Although the current Parliament session ends Friday, the political maelstrom created by the alleged scam in the allotment of coal blocks is unlikely to abate, with the principal opposition Bharatiya Janata Party (BJP) threatening to take the issue to the streets. The BJP is demanding that the government cancel all allocations and subject the entire process to a judicial review.

On Thursday, in a counter-offensive, a large number Congress workers in Orissa clashed with the state police demanding the resignation of state chief minister Naveen Patnaik, alleging that his government made recommendations regarding the allocation of coal blocks.

On Tuesday, the Central Bureau of Investigation (CBI) began raids on at least five companies—Vani Iron and Steel Udyog Ltd, Jas Infrastructure Capital Pvt. Ltd, AMR Iron and Steels Pvt. Ltd, JLD Yavatmal Energy Ltd and Navabharat Power Pvt. Ltd—that were allocated coal blocks. The CBI also filed a first information report (FIR) against a Congress member of Parliament Vijay Darda and his brother Rajendra Darda, a Congress minister in the Maharashtra government. They, along with Manoj Jayaswal, are the promoters of Jas Infrastructure.

On Thursday, citing documents, New Delhi Television (NDTV) said that the Darda brothers and Jayaswal “appear to have made windfall gains" from coal blocks allocated in Chhattisgarh, Jharkhand and Bihar.

At least 152 coal blocks had been allocated between 2004 and 2009, as per a response given by the coal ministry to a Parliament question. Between 1993 and 2011, a total of 195 blocks were allocated to private and government companies.

Prime Minister Manmohan Singh was in charge of the coal ministry for a part of this period, from November 2006 to March 2009.

In fact, as early as 18 March 2008, Mint had first reported about significant irregularities in the award of coal blocks to some 31 companies, nine of which had been rejected in earlier stages of the bidding process for not meeting rules prescribed by the government.

On 27 August, Prime Minister Manmohan Singh said that while he took “full responsibility" for the decisions of the coal ministry, the observations made by the Comptroller and Auditor General (CAG) regarding the coal block allocations were “clearly disputable."

“The policy of allocation of coal blocks to private parties, which the CAG has criticized, was not a new policy introduced by the UPA (United Progressive Alliance). The policy has existed since 1993 and previous governments also allocated coal blocks in precisely the manner that the CAG has now criticised," the Prime Minister said in his government’s defence.

“The UPA made improvements in the procedure in 2005 by inviting applications through open advertisements after providing details of the coal blocks on offer along with the guidelines and the conditions of allotment," he added.

On 2 September, in a blog post, former deputy Prime Minister and BJP Lok Sabha member, L.K. Advani rejected the Prime Minister’s “poor defence of ‘Coalgate.’ "

“It is now universally acknowledged that allowing discretionary allocation of precious resources like spectrum, oil, gas and minerals gives ample scope to people harbouring corrupt and collateral intentions," Advani wrote in his blog.

The CAG report on coal block allocations that was tabled in the Parliament on 17 August, said at least 57 private companies made a gain of Rs1.86 trillion.

The auditor has been critical of the allocations, primarily on three counts.

First, it had observed that the screening committee that was set up to oversee the allocations did not follow a transparent and objective process.

It further stated that competitive bidding could have been introduced in 2006 itself. It said that administrative procedures could have been quickly amended by the government, rather than going in for a lengthy legal process.

Third, CAG said the delay in the introduction of competitive bidding meant that the bidding process was beneficial to private companies.

Interestingly, CAG had, in its draft report first reported by The Times of India on 22 March, said that the undue benefits due to “windfall gains" amounted to as much as Rs10.7 trillion, nearly six times the Rs1.76 trillion figure it had estimated as the presumptive loss in the allocation of 2G spectrum. The draft report had listed 76 private companies as beneficiaries.

On 5 September, Mint reported that it tried to track down 93 small, mid-sized and obscure companies that have been allocated coal blocks by the government.

There, however, appear to be differences within the government on the question of scrapping the allocation of coal blocks.

Although an inter-ministerial group looking into this is likely to give its recommendation by 15 September, The Indian Express reported on 3 September that coal secretary S.K. Shrivastava had objected to the panel’s view recommending that blocks allocated to the Naveen Jindal-owned Jindal Steel and Power Ltd, on which no mining had occurred, should be taken back. The panel is headed by additional coal secretary Zohra Chatterji, who, as per the report, disagreed with Srivastava on the issue.

An NDTV report said the BJP’s stand on the issue could be diluted because the Chhattisgarh CAG had indicted SMS Infrastructure, a company promoted by BJP Rajya Sabha MP Ajay Sancheti, who, the news channel said, was “known for his proximity" to BJP president Nitin Gadkari. The Chhattisgarh CAG had said in April that the allocation of coal blocks to SMS Infrastructure had cost the exchequer Rs1,000 crore, NDTV said.

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