Coal block controversy: A news round-up
The new developments in the coal block allocation controversy, put in perspective
- Narendra Modi inaugurates Rs11,000 crore Eastern Peripheral Expressway
- ED to seek immediate confiscation of Nirav Modi’s Rs7,000 crore assets under fugitive ordinance
- Finance ministry in talks with investors to set up strategic investment fund under NIIF
- Mann Ki Baat: PM Modi urges people to shun plastics
- Niti Aayog says all macroeconomic parameters improved in four years of Modi govt
Last year, Mint started tracking coverage of the coal scam controversy across media. Here’s reviving the series with the latest developments.
18 October 2013
“The central government has come out strongly in defence of Prime Minister Manmohan Singh after former coal secretary PC Parakh said that if he and Kumar Mangalam Birla are conspirators, then so is the Prime Minister equally responsible for the alleged conspiracy in allocation of coal blocks,” CNN-IBN news channel said in a report.
“Union information and broadcasting minister Manish Tewari speaking to Karan Thapar on Devil’s Advocate said that it was unfair to hold the Prime Minister responsible for the administrative decisions taken by the government at the bureaucratic level,” the report further said.
“PC Parakh’s labelling of Prime Minister as conspirator number three in allocation of coal mine to Kumar Manglam Birla-promoted Hindalco is not without reason. The screening committee, of which Parakh was the chairman when he was the coal secretary, makes recommendations to the coal ministry for allocation captive coal mines but the final approval comes from the minister. Prime Minister Manmohan Singh was the Cabinet minister of coal when Hindalco was admitted as a co-developer of Talabira II coal block in 2005 along with Union government-owned Neyveli Lignite Corporation (NLC).,” the newspaper says in an opinion piece.
“According to the procedure laid out for giving out captive coal mining rights, the ministry of coal makes direct allocation of coal mines to government companies under the government dispensation route. For private companies, it does allocation based on the recommendations of an inter-ministerial screening committee,” the piece further notes.
The Indian Express newspaper has said that before finalising the FIR naming Kumar Mangalam Birla and P. C. Parakh, the CBI had internally debated on the idea of making a direct reference to the Prime Minister.
“Sources told The Indian Express that CBI officials, working on the FIR against Kumar Mangalam Birla and ex-Coal Secretary P. C. Parakh had initially made references to the Prime Minister because he was coal minister when Hindalco got the Talabira II coal block. In the final draft, approved by agency director Ranjit Sinha, however, these references appeared as “competent authority’’ and “unknown public servants.,” the newspaper report said.
“CBI officials clarified that the filing of the FIR was an “independent” decision and that no legal advice from any Government law officer was sought in the case. Interestingly, the CBI is expected to file a clutch of other FIRs in the coal block allocation case before 29 October, the next hearing in the apex court,” the news report further said.
“Within days of the CBI naming Aditya Birla Group chief K.M. Birla and former coal secretary P.C. Parakh in its 14th FIR in the blocks allocation case, the coal ministry is preparing to cancel the allotment of some mega blocks including those of JSPL, Tata Power, NTPC and SAIL,” The Indian Express said in another story.
“The inter-ministerial group (IMG) looking into the case has shortlisted 30 blocks. The group is set to meet next week. Show cause notices have already been served a month ago to the allottees of each block pointing to the defaults in meeting milestones,” the report further said.
On 15 May, Mint had reported that the government was set to issue show cause notices to the holders of at least 30 captive coal blocks. “The companies that are likely to be served notices include some of the prominent ones in the power and steel sectors. They include Jindal Steel and Power Ltd, Tata Power Co. Ltd, GVK Power and Infrastructure Ltd and Jaypee Group,” the news report had said.
The Hindu newspaper has said in a report that the reversal of decision that finally led to the award of the Talabira-II coal block to Hindalco Industries Ltd, “points to” Prime Minister Manmohan Singh. The report says this, citing the minutes of the 25th screening committee that had rejected Hindalco’s claim on the block.
“This new evidence shows that the committee’s recommendations were changed in the case of the Aditya Birla Group at the behest of Prime Minister Manmohan Singh who was also coal minister at the time. This conclusion is derived from the fact that though Mr. Parakh has taken part ownership for the change in the decision, the coal secretary alone, though heading the committee, has no power to change its recommendations. This power either vests with the committee or with the coal minister,” the report says.
“Interestingly, the existing policy stipulates that no coal block in which any Central PSU has shown interest or has developed infrastructure in the area to support mining activity in the area will be allotted to any private company. Since in this particular matter, MCL, a Central PSU, had applied and was recommended for coal block allocation, it makes it doubly surprising that the coal minister (PM) went against the policy to approve and allot a share from Talabira II to Hindalco,” the report further says.
Meanwhile, The Hindu Business Line newspaper says in a report that the Public Accounts Committee of Parliament is set to call Kumar Mangalam Birla and P.C. Parakh. “The examination is unlikely to stop there. Members in the panel want industrialists including Naveen Jindal, Vijay Darda, Ajay Sancheti and other beneficiaries of the allocation to be summoned along with the then ministry officials,” the report says.
“Asked if the Prime Minister will also be summoned, a person aware of the developments quipped that “all roads lead to Rome.” It is, however, the prerogative of the PAC chairman, Murli Manohar Joshi of the Bharatiya Janata Party, to decide the names of people who have to be interrogated by the panel,” the report further said.
“Rankled by CBI action against top industrialist K.M. Birla in relation to coal scam, corporate leaders on Thursday said businessmen cannot be made scapegoats on the basis of mere suspicion and such incidents would further widen the government-industry trust deficit,” The Press Trust of India said in a report, citing various industry representatives.
“Hindalco Industries’ managing director Debu Bhattacharya on Thursday said if he had known how complex and fraught the process would be to set up an alumina plant and a smelter in Orissa, he would have never put it up,” Business Today magazine said in a report.
“I really don’t understand where we went wrong. If anything, we have been at the receiving end,” Bhattacharya told Business Today.
“Advocate Manohar Lal Sharma, the main petitioner in the coal scam case, filed an application in the Supreme Court on Thursday, questioning the FIR that the CBI filed against Kumar Mangalam Birla and the former coal secretary, Prakash Chandra Parakh, without including the name of Prime Minister Manmohan Singh,” The Hindu newspaper said in another report.
“While the corporate world slams the CBI’s move to accuse industrialist Kumar Mangalam Birla of conspiracy in allotment of a coal block to Hindalco, the IAS Officers Association is considering petitioning the Centre against “targetting” of former coal secretary P. C. Parakh “merely because he had met Birla before revising his earlier decision rejecting Hindalco’s application”,” a report in The Times of India has said.
“An IAS officer working in home ministry argued that the manner in which Parakh has been pulled out of his retirement and accused of corruption will prove a disincentive for all senior bureaucrats who go out of their way to meet stakeholders before taking major decisions,” the report further notes.
17 October 2013
“Odisha chief minister Naveen Patnaik on Thursday defended his writing to Prime Minister Manmohan Singh to ‘examine expeditiously’ the plea of Aditya Birla Group company Hindalco for allotment of a coal block in the state, which is under the CBI scanner, saying it was done keeping the best interests of Odisha in mind,” the Press Trust of India said in a report.
“I had urged the Prime Minister to examine Hindalco’s request for coal block ... but as per the procedure for coal block allocation, the final decision rests with the central government,” Patnaik told reporters in Bhubaneswar, the report said.
Meanwhile, an NDTV report claims that the CBI first information report (FIR) “may allude to” Prime Minister Manmohan Singh and his office. The report says that the investigating agency has not given a clean chit to the Prime Minister’s Office.
“In what may be more trouble for the Prime Minister, the CBI FIR may allude to him and his office. In the FIR, accessed by NDTV, there is reference to a “competent authority” who cleared all decisions. This seems to be Dr Singh who was holding the coal portfolio at that time,” the NDTV report said.
“The first reference is to “the competent authority” approving the screening committee’s recommendation to reject Hindalco’s application in favour of the PSUs. The second, alleged criminal action is when the competent authority approves coal secretary’s decision to overturn screening committee and approve Hindalco,” the news report further said.
CNN-IBN news channel said on Thursday that the Central Bureau of Investigation (CBI) is scanning the role of Orissa chief minister Naveen Patnaik in the coal scam. “Naveen Patnaik had reportedly written to Prime Minister Manmohan Singh to approve coal blocks of Aditya Birla Group chairman Kumar Mangalam Birla-owned Hindalco,” the news report said.
“CBI sources say Patnaik wrote to Manmohan Singh to allocate the Talabira II coal block to Hindalco. Patnaik sent the letter after the screening committee rejected Hindalco’s bid in 2005,” the report further said.
A top CBI official however told Mint that Patnaik was unlikely to be questioned in the case.
Four months after it booked industrialist and politician Naveen Jindal in the coal block allocations case, the Central Bureau of Investigation said on Tuesday that it had filed a first information report (FIR) against Kumar Mangalam Birla, chairman of the Aditya Birla Group, and P.C. Parakh, a former union coal secretary.
The Aditya Birla Group company Hindalco Industries has also been named in the FIR, the CBI said.
The CBI is investigating coal field allotments in a probe monitored by the Supreme Court.
“They have been booked for criminal conspiracy,” Mint cited a senior CBI official as saying. “The FIR states that in the year 2005, these people colluded in criminal conspiracy with one another and the public servants then abused their official position to show favours to one private company,” the official said, detailing the contents of the complaint, the Mint report said.
Following this, on Wednesday, the agency said that it had recovered more than Rs.25 crore in unaccounted-for cash during a search of Hindalco Industries Ltd’s New Delhi office, in searches conducted on Tuesday.
The money has been passed on to the income-tax department for further investigation, a senior CBI official said. The official, who didn’t want to be named, further said that during searches of other Hindalco offices, the agency had recovered “incriminating documents” Mint reported on Wednesday.
Meanwhile, Parakh, in an interview to Mint on Wednesday, said that the decision to award a part of the Talabira-II coal block to Hindalco was “fair and right.” He said that if he were part of a conspiracy, then Prime Minister Manmohan Singh too should be treated as an equal actor because it was the Prime Minister’s Office that took the final decision.
Meanwhile, in a report, The Times of India said that the CBI’s decision to name Birla in an FIR will “scare” the industry.
“Government leaders are worried that the CBI action against industry leaders like Kumar Mangalam Birla will dent business and investor confidence. At least two UPA ministers on Wednesday slammed CBI’s repeated pursuit of industrialists and bureaucrats and warned that such action impact decision making and hit investor confidence,” the report said, citing union ministers including commerce minister Anand Sharma and corporate affairs minister Sachin Pilot.
“In recent months, apart from Birla, several top industrialists — among them, Sunil Mittal, Ravi and Anshuman Ruia of Essar, Naveen Jindal of JSPL, JSW’s Sajjan Jindal and Unitech’s Sanjay Chandra — and a host of corporate houses, including Anil Ambani group firm, Vodafone and Tata Communication are facing CBI action for alleged irregularities,” the report further noted.
“Sharma was joined by captains of industry such as HDFC chief Deepak Parekh and Biocon head Kiran Mazumdar Shaw who sharply criticised the CBI move. Parekh said that straightforward people like Birla were being harassed by the Indian prosecution system while major fraudsters were allowed to go scot-free,” The Indian Express newspaper said in a related report.
“Enquiry... revealed that while the recommendations of screening committee were being approved by the competent authority, it received letters dated 07.05.2005 and 17.06.2005 from Kumar Mangalam Birla of M/s Hindalco Industries Ltd, requesting for allocation of Talabira II coal block, which were forwarded to the Ministry of Coal,” the CBI has said in its FIR, another report in The Indian Express said.
According to the CBI, “Birla met Parakh, the then Secretary (Coal), during July 2005 and requested for the allocation of Talabira II coal block to Hindalco... Pursuant to these letters and the personal meeting between Parakh and Birla, Parakh, by abusing his official position as a public servant recommended the allocation of Talabira II along with Talabira III coal block to Hindalco, along with other two companies without any valid basis or change in circumstances and with the sole intention to show undue favours to Hindalco,” the report further notes.
26 October 2012
“The public accounts committee (PAC) of the Parliament led by senior BJP leader Murli Manohar Joshi will visit Odisha soon to scrutinize alleged irregularities in coal block allotments in the state between 2005 and 2009,” Business Standard newspaper said in a report.
“The nine-member panel will also examine the procedure followed by the state government in recommending coal blocks for private as well as PSU firms. Besides, the panel will check the status of coal blocks allocated to Mahanadi Coalfields Ltd (MCL), a Coal India subsidiary. The panel will take up scrutiny on the basis of the findings of the Comptroller & Auditor General of India (CAG) on coal block allocations. The PAC will reach Odisha on November 2. It will hold talks with the chief secretary and other top state officials on the next day,” said a senior steel & mines department official,” the report further said.
“The Rs 1.86 lakh crore coal scam had an unexpected fallout with the Jindal Steel and Power Ltd (JSPL) alleging that editors of Zee News group had demanded money to stop the coverage of the company being one of the beneficiaries of coal block allocations,” DNA newspaper said in a report.
“The video shows the broadcaster’s editors seeking money from the steelmaker’s employees to black out unfavourable reports on the company related to irregularities in the allotment of captive coal mines by the government,” Mint said in another report on the same issue.
23 October 2012
“The Inter-Ministerial Group (IMG) will decide the fate of 13 coal mines allocated to public sector firms on the first day of a two-day meeting likely to be held next week This could include firms such as the Chhattisgarh Mineral Development Corp. and the Andhra Pradesh Power Generation Corp.,” the Press Trust of India (PTI) said in a report.
“The IMG will make recommendations with regard to 13 coal mines alloted to public sector firms on 30 October. On 31 October the panel will make recommendations for 20 mines,” an official in the coal ministry said. On the second day, the IMG will make recommendations with regards to PSUs like Nalco and MMTC among others, the official said,” the report added.
“A coal ministry memo on the inter-ministerial group noting that there was no mechanism to verify correctness of data furnished by coal block allotees today led the opposition to allege that government was not serious about checking corruption, but Congress played down the issue,” another PTI report said.
“The communication dated 10/11 September, released by JD(U) president Sharad Yadav to media on Tuesday, said, “the IMG had noted that there is no mechanism to verify the correctness of data furnished by the allotees except in the cases where power plants monitored by Central Electrical Authority are the end use plants.” The memo noted the chartered accountant certificate and physical progress report by the companies was taken on record,” the report further said.
“Accusing ruling Congress of “not being serious” in curtailing corruption, JD(U) on Tuesday said the Opposition will corner the government on coal block issue in winter session of Parliament beginning from 21 November,” yet another PTI report said
“Hitting out against the irregularities in coal block allocations, RTI activist EAS Samra blamed politician-corporate nexus for the corrupt practices and suggested the idea of ‘competitive bidding’ to bring transparency in all sectors,” Zee News reported.
Criticising PM Manmohan Singh for empty reform promises he said, “The PM just talks about reforms. There is no reform visible in reality”. He added that there is no change in the allocation of spectrum yet and in any sector for that matter, be it commonwealth, 2G or coalgate, the report added.
“Laws were flouted and sidestepped by those wielding power in the massive coal scam which took the country by storm. Zee News found a blatant example of this when it visited Raigarh district of Chhattisgarh where it has been alleged that the administration overlooked the concerns of the local population to allot coal block to the Jindal Steel and Power Limited,” Zee News said in another report.
“When Zee News visited ground zero it found out that the people of Khamiyara village were against the allocation of coal block to JSPL. As per the villagers, JSPL’s project had to be given an environmental clearance. However, the police lathi-charged the protestors and chased them away,” the report further said.
19 October 2012
“The Attorney General G.E. Vahanvati has advised the government against going to court to seek exemption for Dr Manmohan Singh from FIRs or police complaints being registered by the opposition BJP across the country in connection with the coal swindle. The government is likely to accept his opinion,” NDTV news channel said in a report.
“The government is concerned that the Prime Minister could be questioned by the police in connection with the coal scam, worth Rs 1.86 lakh crores according to the national auditor.
So it was keen to ask for immunity for Dr Manmohan Singh,” the report said.
“The BJP has launched a high-volume campaign against the Prime Minister because he was in charge of the coal ministry when some coal blocks were allocated at below-market rates. The auditor or CAG said in a report in August that the method of allocation lacked transparency, but did not indict either the Prime Minister or his office. The BJP is filing police cases against coal minister Sriprakash Jaiswal, Sonia Gandhi who is the chairperson of the ruling UPA coalition, and the Prime Minister,” the report further said.
“BJP today sought to resurrect the coal allocation issue, alleging there is a “huge scam” in the cancellation of the allotments where no mining has been done well past the deadline and “undue delay” is being caused by the coal ministry and the Inter-Ministerial Group. BJP MP Hansraj Ahir, who has been spearheading his party’s campaign against coal block allotments, told reporters here today that like in the allocations, there is a “huge scam” in the cancellation of the blocks as well. He named coal minister Sri Prakash Jaiswal and the IMG as the ones responsible for this,” the Press Trust of India said in a report.
“Coal secretary S.K. Srivastava and Coal India chairman S. Narsing Rao were hauled over the coal by the Standing Committee of Parliament on Coal and Steel over the delay in the cancellation of licences to developers that had not undertaken exploration activity within the set time limit. The ministry has sought a week’s time to submit a “detailed reply” to the committee on the action taken. It had had three months for this exercise,” The Hindu Business Line said in a report.
“Sources on the committee told Business Line that they were informed by ministry officials that licences of about 30 blocks were cancelled so far and bank guarantees of 14 allottees encashed,” the report added.
“Rattled by the din over alleged irregularities in allocation of coal blocks, the government is bringing back ‘inspector raj’ in the power sector,” The Indian Express newspaper said in a report.
“Proposed norms envisage ‘independent engineers’ being stationed at each upcoming thermal project for round-the-clock monitoring of operations, something that private developers are calling excessively “intrusive” and “unworkable”,” the report said.
“Private power project developers led by Tata Power and Reliance Power today met officials from the Prime Minister’s Office on this, among other issues. The proposal, part of a contentious bidding regime being ushered into the power sector, is in the revised Standard Bidding Documents (SBDs) for power projects floated by Power Ministry in partnership with the Planning Commission. The provision in the SBD stipulates the appointment of an independent engineer by the state electricity board to oversee operations of the plant, including efficiency in the usage of coal, to decide whether the electricity tariff being charged by the plant is “fair”. The engineer will also have the mandate to review drawings and documents, inspect and monitor the construction and completion of the project,” the report further said.
18 October 2012
The coal ministry has filed a caveat in the Supreme Court against a petition challenging coal block allocations, the Press Trust of India (PTI) reported.
“After the Comptroller and Auditor General (CAG) report had observed that financial benefits of an estimated Rs 1.86 lakh crore could have accrued to private firms, two petitions have been filed in the apex court against the coal block allocations. Members of civil society including former CEC, N. Gopalaswami, ex-Navy chief, L. Ramdas and former cabinet secretary, T.S.R. Subramanian had on 4 October approached the Supreme Court seeking a court-monitored SIT probe into the coal block allocation. They filed a joint PIL along with other retired bureaucrats and NGO ‘Common Cause’ pleading the apex court to quash the entire allocation of coal blocks to private companies made by the Centre since 1993. The petitioners alleged that allotment of coal blocks was non-transparent and was done in an unfair manner in violation of rules and procedures,” the report added.
The Inter-Ministerial Group (IMG) on coal blocks is likely to finalize its recommendations by the month end with regard to 33 blocks allotted to public sector firms such as Nalco and MMTC, PTI said in another report.
“The PSUs which presented their cases before the panel include Andhra Pradesh Power Generation Company, Chhattisgarh Mineral Development Corp, MMTC and Nalco among others,” the report added.
“The coal ministry has sought the advice of the law ministry on the format of de-allocation letters that will be sent to about 13 coal block owners whose blocks are to be taken back by the government, said people familiar with the development. The ministry has also engaged the Coal Controller for calculating the amount to be deducted from the bank guarantees, and the process is likely to be completed this week,” The Economic Times newspaper said in a report.
The coal ministry is sending a stock reply to hundreds of Right to Information (RTI) applicants, citing the ongoing Central Bureau of Investigation (CBI) probe as a reason for not being able to provide answers to questions seeking details on the controversial coal block allocations, Mint said in a report.
Replies to applications received in the last month or so say providing information would hinder the “prosecution” by CBI, according to a government official close to the process, the report added.
15 October 2012
The Supreme Court on Monday sought the stands of the Centre and the Odisha government on charges that authorities had indulged in corruption in giving a coal block, allocated to the state mining corporation in 2003, to a private firm, the Press Trust of India (PTI) reported.
“A PIL has sought a CBI probe into divesting Odisha Mining Corporation Ltd (OMC) of the coal block in Talcher coalfield of Angul district and handing over the same to the private firm,” the report said.
“Filed by Talcher-based social activist Purna Chandra Sahu, the PIL has alleged that “while the conduct of the Odisha government was manifestly illegal, that of the Centre remaining silent despite noticing the various acts of omission by the state is equally shocking.” In the plea filed through advocate Suresh Tripathy, the activist has alleged that “due to the non-transparent and arbitrary policy introduced by the Centre,” the coal block allocated in favour of OMC was handed over to a private firm by the state in an “arbitrary and manifestly corrupt manner.” He has said that the coal block was allocated in favour of OMC on 19 December, 2003 and the consent letter regarding the same was received by OMC on 5 January, 2004,” the report further said.
The coal ministry will start sending letters for de-allocation of coal blocks from Monday, The Economic Times newspaper said, citing a top ministry official.
“All files regarding de-allocation and bank guarantees of companies, which have not met targets to develop blocks, have reached the coal ministry from the inter-ministerial group (IMG). The ministerial panel had decided to de-allocate blocks on which no progress has been made, the official said,” the report noted.
“Blocks to be de-allocated include Bramhadih block in Jharkhand allocated to Castron Mining in 1996, Chinora and Warora (southern part) blocks in Maharashtra given to Field Mining and Ispat in 2003, Lalgarh (North) block in Jharkhand allotted to DOMCO Smokeless Fuels in 2005. Gourangdih ABC coal block allotted to Himachal EMTA Power & JSW Steel, Rawanwara North coal block allotted to SKS Ispat and Power and New Patrapara coal block allotted to Bhushan Steeland others will also be de-allocated,” the report further noted.
The Central Bureau of Investigation (CBI) on Monday filed two fresh FIRs in the coal blocks allocations scam. Sources said that the agency was conducting searches at 16 locations in six cities in five states, CNN-IBN news channel said in a report.
“Two of the companies that were raided during the searches were Green Infra and Kamal Steel. The two companies are accused of misrepresenting their net worth,” the report added.
“The government may use the findings of a Crisil report to counter the Comptroller and Auditor General’s (CAG) estimates on “windfall gains” that allegedly accrued to a clutch of private companies from 57 coal blocks allocated to them between 2004 and 2009 without auction,” The Financial Express said in a front page story.
“Coal ministry sources have hinted that the ministry may put up the report before Parliament’s Public Accounts Committee (PAC) to buttress its position that the CAG was wrong in putting the loss to the exchequer due to discretionary allocation of coal blocks at a whopping R1.86 lakh crore,” the report said, citing coal ministry officials.
Meanwhile, Crisil has revised the fundamental grade of Monnet Ispat & Energy Ltd to three-on-five (3/5) form the previous gradation of four-on-five (4/5), The Hindu Business Line said in a report.
“It said that the downgrade essentially considers the uncertain repercussions of the CAG’s recent report on coal block allocation. “Any adverse outcome will impact Monnet’s profitability significantly,” Crisil added.
Monnet was previously graded higher based on the expected high profitability of its upcoming 1,050-MW power project based on the allocation of two captive coal blocks — Mandakini and Utkal B2 — in Odisha’s Angul district,” the news report said.
CRISIL has recommended linking the valuation of coal reserves to be put up for bidding to international prices. In its draft report on coal block auctioning, Business Standard said in a report. CRISIL has said giving subsidies for use of natural resources does not provide incentives for market participants to judiciously utilise the scare resource in the long run, the report added.
“The draft report notes at least five factors will impact the value of a mine to be bid out. These include coal price considered (whether import parity or CIL), discount rate considered for net present value (NPV), operating cost assumptions (whether departmental or outsourcing), timelines for development and additional payment to project affected people according to the draft Mines and Minerals Development and Regulation (MMDR) Bill,” the news report further says.
13 October 2012
The Parliamentary Standing Committee on Coal and Steel will review the allotment, development and performance of coal blocks. A decision to this effect was taken at the first meeting of the reconstituted committee here on Friday, The Indian Express newspaper said in a report.
“The committee is headed by Trinamool Congress’s Lok Sabha MP Kalyan Banerjee. Incidentally, Hansraj Ahir of the BJP, who is credited with the exposure of anomalies in the allocation of coal blocks, is also a member of the committee. The panel would also look into coal pricing and royalty besides the policies for coal linkages and export of iron ore,” the report said.
Meanwhile, the government could soon grant forest clearance to the Mahan coal block, which finds mention in the Comptroller and Auditor General’s recent report on improper allocations of coal blocks, Mint said in a report.
The Mahan coal block was allocated to a joint venture of Essar Power Ltd and Hindalco Industries Ltd , the report said.
“Former environment minister Jairam Ramesh had been apprehensive of giving a clearance to the Mahan coal block and referred both the blocks to a group of ministers headed by the then finance minister Pranab Mukherjee The panel cleared both the blocks on 30 May. It included the coal and power ministers, apart from the environment minister,” the report noted.
12 October 2012
The Times of India reports that the Orissa unit of the Congress party has accused state chief minister Naveen Patnaik of being involved in the coal block allocation and mining scams. “The opposition Congress on Thursday alleged that chief minister Naveen Patnaik is scared of referring to the mining scam and controversies surrounding the recommendation of coal block to the CBI because investigation by the central agency would expose corruption in his government,” the report says.
“The OPCC president referred to the controversial OMC-Sainik deal for the Utkal -D coal block and said the government, which initially defended its deal, had to finally cancel the joint venture agreement with the Delhi-based company only after public pressure mounted,” the report goes on to say.
Congress member of parliament Vijay Darda may have violated the State Emblem of India (Prohibition of Improper Use) Act, 2005,
“Vijay Darda, Congress member of Parliament (MP) in the Rajya Sabha, who was recently in the news in connection with the coal block allocation scam, appears to be using his position for more than just Parliamentary work,” Business Standard newspaper reports.
“Darda has been using his official letterhead, which has his name and the national emblem, to secure advertisements from companies for the Diwali issue of the publications of the Lokmat Media group, of which he is the chairman,” the report goes on to say.
11 October 2012
JSW Steel on Thursday said it may take the government to court following a coal ministry decision to deallocate the Gourangdih ABC coal mine, allotted jointly to the Sajjan Jindal-led firm and Himachal EMTA Power Ltd, Moneycontrol.com reported.
“We have taken effective steps in development of mine and also in implementing the end use plant. We will take it up at appropriate forum either in the court or in the government, if they take that action which is not right,” the company’s joint managing director Seshagiri Rao told reporters, the report said.
Acting on a recommendation from the inter-ministerial group (IMG), the government on 18 September had announced the deallocation of the Gourangdih ABC block, allocated to JSW and Himachal EMTA jointly in July 2009. The IMG found that the project developers had failed to develop the block within the prescribed time and had not achieved critical milestones including forest clearance, grant of mining lease and land acquisition, the report said.
The Topworth Group, one of the companies which came into the limelight during the coalgate revelations recently, was raided by the income tax sleuths on Wednesday, The Times of India said.
“Topworth is coming up with an integrated sponge iron, steel and power plant at Umrer Road, for which it had purchased a captive coal block originally allotted to Shree Veerangana Steels. This company, promoted by former president of Vidarbha Industries Association (VIA) Mohan Agrawal, had got the block through the government’s allocation system in 2005. However, instead of developing the mine, the promoter sold the company to Topworth Urja and Metals for around Rs30 crore,” the newspaper report added.
“Topworth group is promoted by the Lodha family from Jalgaon. The promoters had been issued a notice by the ministry of coal also, which pointed out that frequent changes in ownership indicated profiteering from of the coal block,” the report further said.
Meanwhile, seven coal blocks that had been allocated to the Maharashtra state government in 2006, together accounting for more than 4,000 million tonnes of coal reserves, remain unoperationalised six years later, DNA newspaper said in a report.
“The blocks allocated to the Maharashtra State Mining Corporation (MSMC) buck the coal allocations trend: Auctions were conducted, joint venture (JV) partners paid the government sweat equity. And still, the blocks lie idle, one embroiled in litigation and the other five jostling with environmental clearances, land acquisition and inter-agency wrangling. The smallest of these is Adkoli in Vidarbha’s Yavatmal district. It is being developed by a JV of MSMC and Sunil Hitech Pvt Ltd that has neither been able to acquire the 300 hectares of land nor get environmental clearances,” the report said.
The coal ministry has cancelled at least five blocks held by government controlled power companies, The Indian Express newspaper reports.
“Brushing aside the contentions of the power ministry and the Jharkhand government, the coal ministry today refused to restore five cancelled coal blocks of central and state-run units of which three belong to National Thermal Power Corporation (NTPC). The move comes close on the heels of the ministry endorsing the recommendations of an inter-ministerial group (IMG) for de-allocating 13 coal blocks and deduction of bank guarantee in cases of 14 mines,” the report says.
“The five blocks which are facing the axe include NTPC’s Kerandari, Chhatti Bariatu and Chatti Bariatu (South) blocks, Damodar Valley Corp’s Saharpur Jamarpani and Jharkhand State Electricity Board’s (JSEB) Banhardih block. The blocks were allocated to the firms under the government dispensation route in 2006-07 but were cancelled on 14 June last year after a review committee recommended their de-allocation citing persistent non-performance,” it further notes.
10 October 2012
The coal ministry will auction 38 coal blocks while 16 will be set aside for government companies, Business Today magazine has reported.
“Having burnt its fingers in the coal scam, the United Progressive Alliance (UPA) is being extra cautious while allocating the next set of coal blocks. Significantly, 38 of the 54 coal blocks identified by the coal ministry will be auctioned while 16 will be set aside for government-run companies,” the report has said.
“Sources in the coal ministry said that even though the decision to allocate the 54 blocks was taken in May, before the coal scam broke, the government is keen on making this round of allocations “as transparent as possible.”,” the report said. “This sense of urgency is further evident in the fact that the government has expedited the allocation process for these 54 blocks. In end-August, Jaiswal had said that it would be difficult to complete the process by the end of this year and that the allocations might take place only next year. This has changed,” the report added.
The coal ministry will file a caveat in the Supreme Court against a petition challenging coal field allocations, Mint reported.
“Since the Comptroller and Auditor General of India (CAG) tabled its report on coalfield allocations in Parliament in August, two petitions have been filed in the apex court against the allocations.
The caveat is being filed for the petition filed by lawyer Prashant Bhushan. There is a chance that the two cases may be clubbed,” the report said.
Meanwhile, the Jharkhand government has decided to take back land from the coal mining companies, including the public sector undertakings, which have either remained unused for years or where mining has been completed, The Times of India newspaper said.
“The state government expects to get back at least 1,000 to 1,500 acres from the companies, including 690 acres from the Central Coalfields Limited, a subsidiary of the Coal India Limited(CIL). The two other CIL subsidiaries that are operational in Jharkhand are Bharat Coking Coal Limited and Eastern Coalfields Limited. State land reform and revenue department minister Mathura Prasad Mahato has asked his officials to prepare a list of such plots which will be sent to the companies for returning the land,” the report said.
“Officials said the matter was discussed with the officials of the coal mining companies and also with the Geological Survey of India for returning the unused land to the state so that it could be allotted to other industries awaiting to establish their plants for many years. There are at least 50 big companies like ArcelorMittal, Tata Steel and Jindal Steel and Power Limited which have failed to start their greenfield projects in the state because of lack of land,” the report further added.
9 October 2012
The gifting away of land belonging to Coal India Ltd by the Odisha government in 2004 is set to embarrass the Bharatiya Janata Party, now accused of favouring a company promoted by relatives of the late former Delhi chief minister Sahib Singh Verma, DNA newspaper said in a report.
“The land in question is a 22-acre expanse in the backward Jharsuguda district of Odisha, given to Global Coal and Mining Pvt Limited (GCMPL) by the state’s Industrial Infrastructure Development Corporation (IDCO) controlled by the BJP’s industries minister Biswabhusan Harichandan in the BJD-BJP government of the time. Not only was the land, owned by CIL subsidiary Mahanadi Coalfields Ltd, handed over to GCMPL, but a coal washery was also permitted on the land in 2006, in clear contravention of the rules. Despite a show cause notice issued by Mahanadi Coalfields Ltd, GCMPL has refused to vacate, taking the dispute into litigation that began in 2009 and is still continuing. Activists allege that the deal was a political favour. “This land has more than 2 million tonnes of coal reserves and was given to GCMPL by Harichandan as a political gift,” said K.C. Das, an activist from the area who has been fighting about the issue for several years now,” the report noted.
“While GCMPL is promoted by Captain Kuldeep Singh Solanki, its associate company ACB (India) Ltd is promoted by Haryana-based Rudra Sen Sindhu and Solanki. Rudra runs ACB (India) Ltd with his six brothers. The youngest brother, Dev Suman Sindhu, is married to Sahib Singh Verma’s daughter. After 2008, Rudra, Vritpal Sindhu and Vir Sen Sindhu (all brothers) also became nominee directors of the GCMPL. ACB (India) Ltd’s website says it holds 35.61% equity interest in GCMPL. The dispute dates back to May 2004, when IDCO filed an ‘alienation’ proposal for 21.17 acres with the Lakhanpur tehsildar’s office. Thereafter, in June 2004, the Jharsuguda collector leased the land to IDCO for establishment of industries. Within just five months, IDCO sub-leased the land to GCMPL for a 90-year period, on 29 October 2004. The land is part of the Samleshwari Open Cast project of MCL. The PSU acquired the land in village Belpahar, Jharsuguda, under the Coal Bearing Areas (CBA) Act,” the report further said.
Meanwhile, the second round of review of the under-developed coal blocks allocated to various companies will begin today, The Tribune newspaper said in a report.
“The inter-ministerial group (IMG) has sought explanation from the public sector undertakings (PSUs) that have not carried out any work on the coal blocks allotted to them. Sources in the coal ministry said a total of 31 notices have been issued to various PSUs to give presentations before the IMG which is scheduled to meet in next over two days from Tuesday. The move to seek explanation from the PSUs comes after the IMG, earlier this month, went ahead with the review of 29 blocks with the private sector. The IMG had recommended the de-allocation of 13 blocks while penalising another 14 with the deduction of their bank guarantee,” the news report said.
“Sources said while on 9 October, the public sector firms with the possession of 15 coal blocks would make their presentations, and on 10 October, 16 coal block holders will make their presentations before the IMG. The public sector firms which will make presentations would include Chhattisgarh Mineral Development Corporation, MMTC and TVNL among others. Sources said that the IMG is likely to finalise its recommendations with regard to the PSU mines by 20 October,” the report further noted.
“The coal ministry has asked Reliance Power to stop mining at coal blocks attached to the company’s Sasan ultra mega power project (UMPP) till transfer of land ownership is completed,” The Hindu Business Line newspaper has reported.
“A senior ministry official told Business Line that the a notice has been issued to Reliance Power to ‘immediately stop mining at Moher and Moher-Amlohri blocks if the company is using land that is yet to be legally transferred to the firm.’ The Moher and Moher-Amlohri blocks, given to the UMPP, are surrounded by land notified by Northern Coalfields Ltd (NCL), according to the Coal Bearing Act. A part of these lands is to be ‘legally transferred’ to Sasan Power Limited (SPL), the Reliance Power company that operates the UMPP,” the report said.
“The ministry has taken the step after NCL informed it that SPL has started ‘using the land even when the legal transfer of land is awaited.’ SPL has started clearing the area and using heavy earth-moving machinery on the land,” the report further said.
“In its reply to the ministry notice, Reliance Power has cited the outcome of the 17 October 2011 meeting, where it was ‘decided and agreed’ between all stakeholders that non-coal bearing areas would be transferred to the UMPP. NCL has given its no-objection to the proposal, Reliance Power said.
Reliance Power, in its reply, said: “For the portion of private land over which Northern Coalfields has raised objection, same has been notified for objection by SPL under Land Acquisition Act, 1894. Northern Coalfields raised its objection only at the last stage when land was being handed over to SPL by the District Collector.”
“The Anil Ambani-owned Reliance Power (R-Power) started production from captive coal mines allotted for its showcase Sasan Ultra Mega Power Project (UMPP) last month, despite a government directive asking the company to stop mining activities till few formalities were completed. The matter relates to the issue of transfer of land held by Coal India subsidiary Northern Coalfields Ltd (NCL) to Sasan Power Ltd (SPL), the Reliance Power subsidiary developing the 4,000 Megawatt (MW) project. Even while the two coal blocks—Moher and Moher Amlohri Extension—were handed over to Reliance, it transpired that NCL had already acquired part of the land of the blocks for its own projects,” the Business Standard said in a related report.
8 October 2012
The government is likely to deliberate next week on the criteria to be adopted for auction of coal blocks to state-owned firms, the Press Trust of India (PTI ) reported.
“An inter-ministerial meet has been scheduled for 15 October and will deliberate on draft terms and conditions for allocation of coal blocks to government companies through competitive bidding mode,” a coal ministry official told PTI . The meeting will “deliberate on draft terms and conditions...regarding allocation of area containing coal to government companies for the purpose of specified end-users under Rule 4 of the Auction by Competitive Bidding of Coal Mines Rules, 2012”, the official said quoting from the agenda. “The agenda of the meeting shall be... to discuss on the criteria to be adopted for selection of the government company for allocation of the block,” the official said. The meeting, to be chaired by coal secretary S.K. Srivastava, will also be attended by chief secretaries of the states besides officials from ministries of steel, power, legal affairs, economic affairs and the Planning Commission,” the report said.
Meanwhile, the government has identified 54 coal blocks to be allocated and has chosen Crisil as its consultancy partner, which will provide methodology for calculating reserve and floor prices for all these coal block allocations, CNBC-TV18 , news channel said.
“It is also known that Crisil may add share lock-in clause in the auction or allocation policy to see that there is a correct use of these coal blocks. It is also learnt that a shareholder meeting will be held on 12 October, 2012, where representatives from finance, steel, power ministry and others will join to discuss this draft report further with the coal ministry officials,” the report said.
The Union coal ministry has asked the Orissa government to expedite the action taken report on the issue of illegal coal mining, Business Standard newspaper has said.
“At a time when controversy surrounding block allocations has caught different coal bearing states in a bind, the ministry of coal has urged the Orissa government to submit its action taken report at the earliest in connection with illegal coal mining activities. In the light of observations made by the parliamentary standing committee on coal and steel, coal secretary S.K. Srivastava has asked Orissa chief secretary B.K. Patnaik to expedite the action taken reports so that they can be compiled and sent to the Lok Sabha secretariat,” the report said,
“Though the coal ministry had written to the state chief secretary earlier on the matter in December 2011, the state was yet to apprise the ministry on action taken in respect of illegal coal mining. Waking up rather belatedly to the directive of the coal ministry, the Orissa steel and mines department has now urged Mahanadi Coalfields Ltd (MCL) and collectors of four districts—Angul, Sambalpur, Jharsuguda and Sundergarh—to comply with the recommendations of the parliamentary panel. The department has also suggested that the recommendations be discussed in the meeting of the district-level task force. The parliamentary standing committee had observed that the natural resources of the country are being plundered at the cost of national economy and destruction of environment. The panel was of the opinion that officials responsible to curb illegal mining are either indifferent or too scared to stop the menace,” the report said.
This comes even as the Orissa government has asked the centre to allocate mines only to state owned companies.
“In a swift move by the department of steel and mines, a letter sent to the director of Union coal ministry P. Soma Shekhar Reddy, the state government stated, “The coal required by the industries located outside the state can be met by the host state government companies. However, priority will be given to the requirement of coal for industries located or proposed to be set up in the host coal bearing state.”The state sent the letter after the centre circulated a draft of the revised guidelines for coal block allocation to the government companies for the purpose of mining. The letter also said that the areas containing coal for allocation to government companies should be identified taking into consideration that such areas should be fairly large in size having sufficient and good-quality coal reserves to enable planning high-capacity coal projects with world class technology and standards with matching infrastructural facilities so that the needs of the end-use plants could be met on a long term basis,” a report in The Pioneer newspaper said.
“On 3 September, the coal ministry circulated the revised terms and conditions under Rule-4 of the ‘Auction by competitive bidding of coalmines Rules-2012’ to steel, power, finance and industrial production departments of the state governments seeking their comments before its finalization. According to the proposed guidelines, the applications should contain detailed justification with reference to requirement of the state, the existing linkages (the plant/industry where the mined coal will be used) and the areas containing coal already allocated,” the report further added.
“Former MP and member of Public Accounts Committee (PAC) Surinder Singla has asked Comptroller & Auditor General (CAG) Vinod Rai to revisit his report on coal in the wake of the Supreme Court’s opinion on the Presidential Reference, which confirmed the Constitutional position that policy making power lies within the exclusive domain of the executive,” The Indian Express newspaper reported.
“The former MP said that people of India deserve the right to be re-educated on the fresh findings of the CAG as revisited in the light of the Supreme Court’s observation,” the report said.
7 October 2012
In an interview to television news channel CNN-IBN, Bharatiya Janata Party (BJP) President Nitin Gadkari has said “that he will quit politics if anybody could prove his alleged business links with close aide and party MP Ajay Sancheti, currently in the midst of an irrigation scam in Maharashtra.”
Sancheti’s name also figures in connection with the controversy related to the allotment of coal blocks.
“Gadkari said that Sancheti did not get a single contract during his tenure as the Public Works Department (PWD) minister of Maharashtra,” a report published by the channel said.
“Ajay Sancheti is doing his business since the last 30 years. He is a three generation businessmen and contractor. I have... directly, indirectly... not any type of business relations with him. Now I am going to challenge everybody... to Congress party and the media. If you have got a single evidence that can prove that I am a direct, indirect business partner of Ajay Sancheti or Sharad Pawar, please identify, I will donate all that property to whosoever it may be who can identify,” the channel cited Gadkari as saying.
The Press Trust of India (PTI) said in report that the Congress party has demanded that the Chhattisgarh government come out with a ‘white paper´ listing the alleged favours given to Sancheti.
“The state Congress spokesperson Shailesh Trivedi alleged that Chhattisgarh government showed favours to Sancheti’s companies as he is a friend of BJP president Nitin Gadkari. He charged that SMS Infrastructure, the company owned by Sancheti family, had got two coal mining leases from the state government which would cause loss of Rs 25,000 crore to the state exchequer,” the report further said.
PTI also reported that the Inter-Ministerial Group (IMG) on coal blocks is likely to finalise its recommendations with regard to the 31 mines allocated to public sector firms by October 20.
“IMG, which had recently concluded the scrutiny of 31 coal blocks alloted to 51 private firms, is meeting this week o decide the fate of 31 coal blocks allocated to public sector firms. PSU companies will present their case before the IMG on October 9 and 10. Of the total 31 coal blocks allotted to the public sector firms which were issued notices, around 15 coal block holders will present their case on first day, while 16 will make presentations on the second day. The firms which will make presentations include MMTC, Chhattisgarh Mineral Development Corporation and TVNL. The Coal Ministry is holding an internal meeting this week to discuss ways to deduct bank guarantees of private companies in case of the 14 blocks following the Inter-Ministerial Group recommending action against them.”
A few weeks after it brought a resolution giving state-owned Orissa Mining Corporation (OMC) first right over areas containing major minerals such as iron ore, bauxite and chromite, the Naveen Patnaik government has written to the Centre to allocate areas containing coal to OMC alone, The Indian Express newspaper reported.
“Replying to the coal ministry’s draft terms and conditions for allocation of coal blocks to government companies for the purpose of mining under Rule 4 of the Auction by competitive bidding of coal mines rules 2012, the state government on Saturday wrote back that the area containing coal should be allocated only to government companies under the control of host coal-bearing state. The Centre had circulated the draft terms among all the states on September 3 this year. Last month, the Orissa steel and mines department had brought out a resolution saying mines which have not been leased out would henceforth be given to OMC,” the report said.
“Replying to another draft clause of the ministry that coal produced from blocks would be distributed through long-term contracts or linkages to specified end users, Orissa listed out four categories of plants which should be given coal,” the report further said.
6 October 2012
Activist environment group Greenpeace has alleged that the environment ministry has cleared the controversial Mahan coal block in Madhya Pradesh.
“The ministry of environment and forests (MoEF) has allegedly given forest clearance to controversial coal block in Mahan, Madhya Pradesh,” a report in The Times of India newspaper said. “The NGO claimed that the clearance was in violation of forest rights of tribals living in the area. People from different villages around the coal block have written to the district collector demanding that their forest rights be recognised. The villagers said that they are dependent on the Mahan forest for a variety of forest produce. Another letter from the villagers claimed that they were not allowed to hold a gram sabha to claim rights under Forest Rights Act,” the report added.
“Madhya Pradesh chief minister, Shivraj Singh Chauhan had lobbied with then environment minister, Jairam Ramesh several times to get the coal block cleared. But the ministry had denied clearance due to environmental concerns,” the report further said.
5 October 2012
The coal ministry will hold an internal meeting next week to discuss ways to deduct bank guarantees of private companies in the cases of 14 blocks following the Inter-Ministerial Group recommending action against them, the Press Trust of India (PTI ) reported.
“Coal secretary S.K. Srivastava has called a meeting with officials of his ministry next week. There would be discussions on the calculations done by the coal controller on bank guarantee deduction for coal mines,” the report cited an official in the coal ministry as saying.
In another report PTI said financial services firm Crisil, consultant to the coal ministry for fixing the reserve prices for auction of 54 mines, is expected to submit its report on 8 October.
“Further, the ministry is expected to hold a meeting on 16 October to deliberate on the Crisil report, the official added. Based on the report, the government would initiate the bidding process for allocation of mines,” the report said.
The Central Bureau of Investigation (CBI) looking into coal block allotments “between 1993 and 2004 has zeroed in on the period around 2003 as it has found that the highest number of allotments were made in that year when the NDA government was in power, and the BJP’s Karia Munda was the coal minister,” The Indian Express has reported.
“CBI officers said that 20 blocks were allotted during 2003, of which 13 were given to state public sector firms and the rest to private companies. The private companies include Prakash Industries Ltd (PIL), promoted by Ved Prakash Aggarwal, brother of Jai Prakash Aggarwal, who is known to be a BJP-RSS supporter. The coal block to PIL was allotted in BJP-ruled Chhattisgarh. Usha Martin Ltd, which also owns media group Prabhat Khabar, was allotted a coal block in Jharkhand in 2003. The list of those who got coal blocks was given to the CBI by the coal ministry after the agency registered multiple FIRs and preliminary enquiries to probe coal block allotments since 1993,” the report said.
Meanwhile, the “Prime Minister’s Office has convened a meeting of Coal and Power Secretaries today to discuss the issues related to the two sectors including introduction of competitive bidding for coal blocks, review of the progress made by the Inter-Ministerial Group (IMG), reforms in the power sector, price pooling formula for coal and signing of fuel supply agreements (FSA) by Coal India Limited (CIL),” NDTV reports.
Members of civil society and non-governmental organizations (NGOs) have moved the Supreme Court, demanding the cancellation of all coal blocks allotted to private companies since 1993, the Hindustan Times said quoting an IANS news agency report.
“The Supreme Court was moved on Thursday by NGOs seeking the cancellation of all coal blocks allocated to private companies from 1993 to 2012 and demanding a court-monitored investigation into the issue,” the report said.
“The petition was filed by NGO Common Cause, former cabinet secretary T.S.R. Subramanian, former chief election commissioner N. Gopalaswami, former Indian Navy chief R.H. Tahiliani, former secretaries to government Ramasamy R. Iyer and Sushil Tripathi. The petition alleged the government went in for massive allocation of coal blocks to a few select private companies at no cost in a “completely arbitrary and non-transparent manner, causing a huge loss to the public exchequer running into tens of lakhs of crores of rupees”.
4 October 2012
The Central Bureau of Investigation (CBI) has got its teeth into new evidence pointing to the manipulation of coal block allocations, the India Today magazine has said in a report.
“Explosive documents in its possession point to the cosy relationship between the families of mining baronManoj Jayaswal and that of Congress MP Vijay Darda . Mail Today, which first exposed the Jayaswal-Darda link in Coalgate, investigates how the two families worked in tandem to illegally benefit from the coal block allocations,” the report says.
“CBI suspects that shares of AMR Iron and Steel Pvt Ltd, one of the Jayaswal group companies, were given free of cost to the Darda-owned Lokmat group in return for a coal block allocation facilitated by the Congress MP,” the report adds.
“A telltale communication of the Jayaswal family, a letter written by Manoj to his father and brothers says, “AMR has been allocated a coal block because of the efforts of the Lokmat group and hence commitments made have to be honoured in true spirit. I convey that 26% free equity be allotted immediately to Lokmat group without any further delay and Lokmat group nominees be appointed as Chairman and Director. “There is further indication of his high political links in the letter. It refers to the settlement of ownership of 14% shares- presumably of AMR- to be decided by ‘Shri Sriprakashji’, that is Union coal minister Sriprakash Jaiswal. However, Jaiswal has denied that he has anything to do with the matter,” the report further adds.
Meanwhile, a report in The Economic Times newspaper has said that the Abhijeet Group, which is being investigated by the Central Bureau of Investigation (CBI) for its alleged involvement in the indiscriminate allotment of coal blocks, is likely to approach banks for restructuring its loans.
“Select units of the company could approach banks for a debt recast. They are still in dialogue with the banks,” said a banker in the know of the development. “We are a bit cautious after the CBI raids on the promoter and we are monitoring the developments,” the report said, citing a banker with exposure to the company.
In a separate report, The Economic Times has said that Rashtriya Janata Dal leader and former corporate affairs minister, Prem Chand Gupta, appears to be in trouble, with BJP approaching CBI with documents pointing to his links with IST Steel and Power that bagged a coal block in Maharashtra.
“Documents furnished by BJP secretary Kirit Somaiya show that Gupta, a close associate of RJD leader Lalu Prasad, is a director of Hong Kong-based Gupta International Investment Company that holds 49.95% stake in IST Steel and Power. Dahegaon Makarad coal block was allotted to IST Steel and Power on 17 June 2009. It was among the coal blocks de-allocated by the coal ministry on 26 September. The annual returns filed by Gupta International Investment Company with the Registry of Hong Kong show Prem Chand Gupta as a director of the company, residing at Ground Floor, 15, Wyndham Street, Central Hong Kong. His wife Sarla and son Mayur are the other directors of the company,” the report says.
“When contacted by ET, Gupta admitted he is a director of the company, but said he held no shares in it. “The company was floated 38 years ago and was a family business. It is run by my two sons - Mayur and Gaurav. I have no share-holding in it,” he said. Gupta was a minister in UPA-I regime till May 2009 and the coal block was allotted in June 2009. The Dahegaon-Makardhokra IV block was given to IST Steel and Power, along with cement firms Gujarat Ambuja and Lafarge India, in June 2009. The block has 48.84 million tonnes of extractable reserves. IST Steel and Power owns the majority 53% stake in the block. As per Gupta, his son Gaurav has a running sponge iron plant that has been in operation since 2007. When the government invited applications, his sons applied and Gaurav got an underground coal block along with the other two companies,” the report further said.
3 October 2012
Citing the ongoing probe by the Central Bureau of Investigation (CBI), the Prime Minister’s Office (PMO) has declined to part with information on coal block allocations, the Press Trust of India (PTI) reported.
“Exercising his Right to Information, advocate Vivek Garg has sought information on minutes of all meetings between Union coal minister and Prime Minister, copies of decisions, approvals, orders and letters or correspondences between the Coal Ministry and PMO related to coal blocks allocation. Garg has also filed an RTI application seeking details on the coal blocks allocation to Ministry of Coal information on which was denied by it saying the information sought was not available in the “compiled form”. The coal ministry said information regarding details of coal blocks allocated and various acts and guidelines are already available in public domain,” the report said.
“Further, most of the files or records relating to allocation of coal or lignite blocks are in the custody of CBI, New Delhi. The information sought is not available in the compiled form and it would divert the resources of the public authority very disproportionately to provide the information,” the Ministry said in its reply,” the report further said.
Business Standard newspaper reports that the government is coming up with a new policy that would make even Coal India Ltd (CIL) pay for mining rights.
“The coal ministry has decided to charge CIL a “reserve price” for the 116 coal blocks allotted to the state-owned miner,” the report said citing a coal ministry official.
“The official also said the reserve price for CIL would depend on the average grade or quality of coal in the block, the location of the acreage and the accessibility of the mining lease. The details of how the reserve price for coal blocks would be calculated and the quantum of the outgo for the world’s largest coal miner are yet to be worked out,” the report said.
“The new dispensation for coal blocks would be different from the government’s policy in the oil and gas sector, where state-owned companies are considered on a par with private ones during bidding for oil and gas blocks under the New Exploration and Licensing Policy (Nelp). Under Nelp, companies are not charged an upfront payment, but they have to share a portion of production with the government, after recovering costs,” it further added.
October 1, 2012
The Supreme Court on Monday dismissed a plea that had challenged the Comptroller and Auditor General’s (CAG) power to conduct performance audit of coal block allocation and other issues.
“Observing that CAG is not a “munimji” (accountant), the Supreme Court today said scrutinizing the effective use of resources is his primary duty and it was for Parliament to accept or reject his reports,” The Indian Express newspaper said.
“The apex court brushed aside the petitioner’s argument that the CAG had no constitutional mandate to scrutinise the effectiveness or economic aspect of the government’s policy matters,” the report noted.
Meanwhile, the Orissa government on Monday cancelled its joint venture with Delhi-based Sainik Mining and Allied Services Ltd (SMASL), the Press Trust of India (PTI) reported.
“Criticized for giving 74% stake to a private company for coal mining in the state, Odisha Mining Corporation (OMC) today said its joint venture agreement with Delhi-based Sainik Mining and Allied Services Ltd has been cancelled. The JV between OMC and SMASL was signed in 2003 to develop Utkal-D coal block having a reserve of 145 mt (million tonnes) in Angul district. It had been alleged that the JV agreement was made in violation of the Coal Mines (Nationalisation) Act-1973,” the report said.
“Meanwhile, a PIL (public interest litigation) has been filed in the Supreme Court over OMC’s deal with SMASL for developing Utkal-D coal block, where 74% stake in the joint venture has been conceded to the private player,” the report further said.
29 September 2012
State owned Odisha Mining Corporation (OMC) has scrapped the joint venture deal with Delhi-based Sainik Mining & Allied Services Ltd (SMASL) after the state controlled miner faced a barrage of criticism for conceding controlling stake in the joint venture to the private player, Business Standard newspaper has reported.
“The state government’s decision to cancel the deal with SMASL comes six days after a public interest litigation (PIL) was filed in the Supreme Court on grounds of blatant violation of Coal Mines (Nationalization) Act-1973 by allowing the private player to have controlling stake in a coal mine allocated to a PSU. The petitioner had demanded a CBI probe into the deal,” the report said,
“The state government is understood to be playing safe on the issue of coal blocks and projects linked to coal mining after finding itself in a bind against coal block allocation row. The equity pattern of the OMC-SMASL joint venture had also drawn flak from the Ministry of Coal which had held OMC guilty of violating the Act by conceding controlling stake to a private player for developing a coal block alloted to a state PSU. The ministry had issued a showcause notice to OMC in July 2010, urgingthe PSU to raise its stake in the JV company to at least 51 per cent.In addition to this, the ministry had also advised OMC to suitably modify the Memorandum and Articles of Association of the JV company. In response, the state Chief Secretary B K Patnaik in a letter toCoal secretary Alok Perti in February this year had informed that OMCin its board meeting had decided to raise its equity in the JV company to 51 per cent from the existing 26 per cent,” the report further added.
28 September 2012
On 2 October, a group of villagers in Chhattisgarh will march, to get mining rights, The Times of India reports.
“Amid raging controversy over coal block allocations, Chhattisgarh is all set to witness a unique movement from 2 October- Gandhi Jayanti- when a group of villagers will start mining coal, demanding that local community be given mining rights on natural resources,” the report says.
“Around 1000 villagers will break the coal law like Mahatma Gandhi led the movement against salt law. Local communities should have the first right on natural resources and not industrial houses”, the report cited Savita Rath of non-government organisation Jan Chetna Manch as saying.
The government is devising a single window clearance mechanism for development of coal blocks, The Economic Times newspaper reported.
“The government will discuss setting up a single-window clearance mechanism on the lines of the Foreign Investment Promotion Board (FIPB) for coal blocks to expedite their development—a proposal mooted by the Comptroller and Auditor General (CAG) in its recent report on coal block allocations,” the report noted.
“In a meeting with top power and coal ministry officials on October 5, Pulok Chatterjee, principal secretary in Prime Minister’s Office, will also deliberate government’s defence against the CAG’s report that alleged Rs.1.86 lakh crore undue benefits to private companies through non-transparent coal block allocations, sources said. The meeting is likely to be attended by coal secretary S. Srivastava, power secretary P. Uma Sankar and Coal India chairman S. Narsing Rao among others. The meeting will also discuss the government’s plan of action against the public interest litigation (PIL) admitted by the Supreme Court against allotment of coal blocks to kin of political leaders. The coal ministry is drafting replies to the queries raised by the Supreme Court,” the report further said.
In an interesting opinion piece, Firstpost.com has said that Union minister Kapil Sibal may have “jumped the gun”, while welcoming the Supreme Court’s judgement and hailing it as a vindication of the government’s stand on the issue of allocation of natural resources.
“The Supreme Court clarified that “Auctions may be the best way of maximising revenue but revenue maximisation may not always be the best way to subserve public good. Common good is the sole guiding factor under Article 39(b) for distribution of natural resources. It is the touchstone of testing whether any policy subserves the “common good” and, if it does, irrespective of the means adopted, it is clearly in accordance with the principle enshrined in Article 39(b),” the opinion piece notes.
“ Between 1993 and 2011, the government gave away 195 coal blocks with total geological reserves of 44.8 billion tonnes—free—to private and government companies. An estimate of the total amount of coal present in a block is referred to as geological reserve. Due to various reasons, including those of safety, the entire reserve cannot be mined. The portion that can be mined is referred to as extractable reserve. Of these, 115 blocks were given to companies which would use the coal that they produced from these captive blocks for the manufacture of cement and iron and steel, conversion of coal to oil and commercial mining. These blocks have geological reserves amounting to 20.53 billion tonnes of coal. The manufacture of cement and iron and steel or commercial mining operations are “for profit” operations and cannot be termed as activities that are purely about “common good”. Hence there was no reason for the government to give away these coal blocks for free. That is a clear interpretation that one can draw out of what the Supreme Court said. Eighty coal blocks were given to companies for the manufacture of power. Of these 80 coal blocks, 53 blocks were given to companies for captive dispensation of power. These blocks had 10.66 billion tonnes of geological reserves of coal. What this meant was that companies had to use the coal produced from the blocks they had been given to produce power to meet their internal needs. Hence a company manufacturing steel could use coal produced from its blocks to generate power needed to produce steel. The “free” coal blocks would allow them to produce power cheaply and thus bring down their costs and thus make higher profits from what they would have otherwise made. Again, the end result is a “for profit” operation and this cannot be categorised as “common good”. Hence, 168 out of the 195 coal blocks with geological reserves of 31.15 billion tonnes were allocated to companies supposedly in “for profit” operations. The remaining 27 blocks with geological reserves of 13.65 billion tonnes were allocated for production of power. Of these seven blocks had been allocated to ultra mega power projects. The companies which were given these blocks could produce power cheaply because they did not have to pay for the coal block. This can be categorised as a “common good”. Hence, common good is limited to around 30 percent of the coal reserves allocated under the government’s policy of giving away coal blocks for free. Even this can be questioned given that all the seven coal blocks (with geological reserves of 2.6 billion tonnes) allocated to the ultra mega power projects are in the private sector. And no private sector company is in business to make a loss,” the piece says.
A DNA report says that had the Coal Controller’s Organisation (CCO) not been under staffed, the alleged coal scam could have been prevented.
“DNA has found that the severely short-staffed CCO is simply unable to monitor coal blocks efficiently. With just about 150 employees, the CCO monitors more than 600 coal blocks across the country. These blocks include those belonging to state-run Coal India Ltd (CIL) and its subsidiaries. Worse, more than 80% of the CCO’s existing employees are non-executive staff, including peons and drivers. What’s more, many of the CCO’s employees are on deputation from CIL, and every year, a few return to their parent company,” the report says.
“As a result, the CCO remained unable to even report that of the 194 private captive block allottees, production has begun only in 28. Moreover, the accuracy of data furnished by the allottees could not be properly assessed by the monitoring committee for captive coal blocks. “The CCO could not conduct any physical inspections of allotted coal blocks to ascertain the actual progress vis-à-vis the progress reported by the allottees,” the CAG report had noted. In July 2010, the ministry had directed that nine blocks that had reached peak rated capacity would not be reviewed further, and that their progress would be monitored by the CCO. But the CCO failed to comply with these directives, thanks to lack of manpower,” the report further notes.
27 September 2012
The government is likely to take a call on the auctioning of coal blocks that were deallocated last week on 5 October, The Hindu newspaper reported.
“The Prime Minister’s Office (PMO) has convened a meeting of the coal and power secretaries on 5 October to discuss the issues related to the two sectors including introduction of competitive bidding for coal blocks, review by the inter-ministerial group (IMG),” the newspaper report said.
“The PMO is also likely to review the progress of the competitive bidding process to be introduced for auctioning coal blocks in future. The coal ministry had already listed around 54 coal blocks for auctioning under this new medium, and had engaged the services of a consultant. The coal secretary is expected to give a feedback on the proceedings of the IMG set up to review the allocation of 58 coal blocks, and the action taken by the coal ministry on the recommendation of IMG,” the report further said.
In an interesting analytical piece, the Business Standard newspaper has sought to detail how a global spurt in coal prices and loopholes in the methodology followed during allocation of the blocks might have led to the alleged coal scam. The report says that the quantum of reserves allocated to companies has moved in tandem with the increase in global prices of coal, year after year.
“The mad rush for grabbing coal reserves by corporates with links to political heavyweights, as exposed by the Comptroller and Auditor General of India (CAG) and the Central Bureau of Investigation (CBI) in the coal scam, should not come as a surprise. Superimposing the consistent rise in global coal prices over the yearly data for coal blocks allocated over the past decade reveals the real reason behind the Rs.1.86 lakh crore scam,” the piece says. “The quantum of reserves allocated to companies has moved in a surprising tandem with the global prices year after year. Interestingly, not only did the allocations jumped with the rise in prices between 2002 and 2007, they also dropped at exactly the same time as the prices fell. No doubt, the Indian economy is fully-integrated with the global developments.”
“The global coal prices remained largely stable below $25 per tonne during late 1990s and early 2000s. Coal block allocation began in India in 1993. The government allotted 41 blocks over the next decade to 2003. Prices started shooting up in 2003 as demand from developing economies, particularly China, rose. The upward trend continued and prices touched a high of $190 per tonne in 2008 when the global meltdown led to a crash in coal prices. Consider the benchmark price for thermal coal exports from Newscastle in Australia, the world’s biggest coal export harbor. The Newcastle prices increased from $25 per tonne in 2003 to a high of $185 per tonne in early 2008. The number of blocks allotted annually in India also jumped from 5 in 2004 to 52 in 2007. Post 2007 and early 2008, the prices came tumbling down from $185 per tonne to $80 per tonne currently. The number of blocks allotted also came down from 52 in 2007 to 24 in 2008, 16 in 2009 and finally 2 blocks allotted in 2011. Overall, the government had allotted a total of 195 coal blocks with reserves of a whopping 43 billion tonne (BT) to 289 companies between 1993 and 2011. A closer look at the growth of margins available to companies between 2003 and 2008 in coal mining, along with the relative ease of bagging reserves, further reveals why the coal scam was waiting to happen. Against a market price of $25-30 per tonne in 2003, the cost of production worked out to around $20 per tonne in India, leaving a tiny margin of $5 on every tonne of coal mined. This margin went up to as high as $130 per tonne in 2008 when prices jumped to $180 per tonne even as cost of production rose to $50 per tonne,” the report notes.
The Supreme Court on Thursday said as part of its order on the centre’s presidential reference on the auction of natural resources, that natural resources cannot be distributed as charity, Firstpost.com notes in an interesting piece.
“Does coalgate qualify as a scandal of 2G proportions? Yes, if the government has given away coal mines as a matter of largess, charity, donation or endowment for private exploitation. Yes, if the government has allowed one set of citizens prosper at the cost of another set of citizens. And yes, if the coal mines are not allocated to best serve the common good,” the piece notes.
“Justice Jagdish Singh Khehar, one of the five Supreme Court judges who delivered their unanimous opinion on the Presidential reference on Thursday, made it amply clear in an addendum as to what makes a scam in a given situation. And for this, justice Khehar took coal sector as a hypothetical illustration to explain where it might lead the government to arbitrariness and be unfair in disbursement of natural resources, it adds.
“One is compelled to take judicial notice of the fact that allotment of natural resources is an issue of extensive debate in the country, so much so, that the issue of allocation of such resources had recently resulted in a washout of two sessions of Parliament. The current debate on allotment of material resources has been prompted by a report submitted by the Comptroller and Auditor General, asserting extensive loss in revenue based on inappropriate allocations. The report it is alleged, points out that private and public sector companies had made windfall gains because the process of competitive bidding had not been adopted. The country witnessed a similar political spat a little while earlier, based on the allocation of the 2G spectrum,’’ the piece cites justice Khehar from the apex court’s order.
“By picking up coal sector as a hypothetical situation, justice Khehar explicitly demonstrates how a forthright legitimate legislative policy may take the shape of an illegitimate stratagem,’’ the piece notes.
“Let’s assume that the government decides to allocate coal lots without any reciprocal favour or monetary gain or any other consideration from a private player engaged in power generation. The law of the land allows it only when the private player is awarded the power project on the basis of ‘competitive bids for tariffs’. Elaborating the same situation further, Justice Khehar says: ‘If the bidding process to determine the lowest tariff (of power) has been held, and the said bidding process has taken place without the knowledge that a coal mining lease would be allotted to the successful bidder, yet the successful bidder is awarded a coal mining lease. Would such a grant be valid?… Grant of a mining lease for coal in this situation would therefore be a windfall, without any nexus to the object sought to be achieved’,’’ it adds.
The Press Trust of India (PTI), also citing justice Khehar, said that the Supreme Court on Thursday said in its order that the Comptroller and Auditor General’s “computation of massive losses in 2G spectrum and coal blocks allocations and subsequent debate could be the reasons for the Centre filing the Presidential reference to seek opinion on methods to part with the natural resources”.
“But it does seem, that the presidential reference is aimed at invoking this court’s advisory jurisdiction to iron out the creases, so that legal and constitutional parameters are correctly understood,” the report cited the judge as saying.
Meanwhile, Mint reported that the government is likely to use its discretion to allot at least 16 coalfields by December to state-owned companies, citing coal secretary S.K. Srivastava.This is a part of the ministry’s plan to give away 54 coalfields via the routes of allocation, bidding and auction, the report said.
“The Supreme Court’s response on Thursday to a presidential reference that auction is not the only way to allocate natural resources may help improve the sentiment around allocations, which have been criticized after a report of the Comptroller and Auditor General of India (CAG) alleged losses from allocating 195 coalfields since 1993,” the report said.
In an interesting turn of events, Congress party has now sought to link Gujarat chief minister Narendra Modi to the coal block allocation controversy, The Times of India has reported.
“Linking Gujarat chief minister Narendra Modi with a coal block allocation controversy, opposition Congress on Thursday sought a probe by the Central Bureau of Investigation (CBI) into the Mine Developer Cum Operator (MDO) deals of Chhattisgarh Mineral Development Corporation (CMDC,” the report said.
“CMDC’s deals are suspicious as its modus operandi is to enter into joint venture with companies and have agreements which are heavily loaded in favour of other parties. CMDC acted just like a middleman,” the report cited AICC general secretary B.K. Hariprasad as saying.
“Hariprasad said this block, having coal reserves of 1588.99 mt, were allocated to CMDC for the joint venture company—UCM Coal Company Limited—it had formed with Uttar Pradesh Rajya Vidyut Utpadan Nigam Limited (UPRVUNL) and Maharashtra Power Generation Corporation (MAHAGENCO),” the report further said. “Stating that the CMDC had sought coal block allocation on the basis of joint venture agreement (JVA) with Bhushan Steel and for supplying 500 MT raw coal to this company, the AICC general secretary said this coal block was allocated to CMDC without the recommendation of Orissa government. Ever since the Coalgate scam surfaced, the joint venture agreements reached between Chhattisgarh Mineral Development Corporation (CMDC) with private players and selection of Mine developer cum operator (MOD) are under cloud with the opposition pointing out that these deals were aimed at favouring these companies.”
A report in the Business Standard newspaper has said that the controversy over coal block allocations could possibly delay India’s first coal-to-liquid project.
“With the Odisha government getting entangled in a web of controversy over its recommendation for coal block in favour of Jindal Steel & Power Ltd (JSPL) for its Rs 60,000-crore coal-to-liquid (CTL) project, the MoU (memorandum of understanding) to be signed with the company is likely to be delayed,” the report said.
“After facing the salvo of the Opposition over chief minister Naveen Patnaik’s alleged preferential treatment towards JSPL, the state government is understood to be treading with extra caution amid coal block allocation row,” the report further added.
“The CTL project proposed at Durgapur in Angul district envisaged a production capacity of 80,000 barrels per day. The project needs 4000 acres of land and the state government has decided to provide at least 50% land to Jindal Synfuels without waiting for benchmarking and other detailed analysis. The CTL plant will produce petrol, diesel, kerosene and aviation fuel. Direct and indirect employment is expected to be generated for 30,000 people through this project,” the report further said.
The Indian Express newspaper has said that as many as four companies promoted by Congress member of parliament Naveen Jindal may have used the same address, which, the newspaper report says, was “fake.”
“28, Najafgarh Road, New Delhi’. This was the address used by four companies of Congress MP and industrialist Naveen Jindal that applied for coal blocks between 2006 and 2009. Two of them — Nalwa Steel and Gagan Sponge — got the blocks using what has now turned out to be a non-existent address. The other two companies which applied for blocks giving the same Najafgarh address and contact details on their forms were Opelina Finance and Investment Ltd, and Mineral Management Services,” the news report said.
“The Jindal-owned Jindal Steel and Power Ltd (JSPL) and Jindal Power Ltd (JPL) also applied for coal blocks. JSPL too was allocated blocks by the screening committee,” the report further said.
Meanwhile, The Hindu newspaper reported on how a Puducherry government owned company may have been spurred by a company to acquire a coal block.
“It appears to be a strange case of a private firm spurring a government body to seek a captive coal mine,” the report says. “In December 2006, the government body — the 38-year-old Pondicherry Industrial Promotion Development and Investment Corporation (PIPDIC) – had apparently no idea to seek a coal block until it received an “unsolicited offer” from the private firm — J R Power Generation Private Limited (JRP), which had no prior experience in coal mining or power generation — for a coal mine development project.”
“In a matter of weeks, PIPDIC took a formal decision to approach the Coal Ministry for allocation of a block. A week later, it submitted a formal application to the Ministry, seeking allotment of coal block equivalent to 530 million tonnes (MT). On the same day (January 17, 2007), the Corporation signed a memorandum of understanding (MOU) with JRP, a company owned by the family of S. Jagathrakshakan, now Union Minister of State for Information and Broadcasting, without carrying out a techno-economic feasibility study of the project and ascertaining technical capabilities of the private firm,” the report goes on to add.
26 September 2012
In an interesting analytical piece on the coal block allocation issue, The Hindu Business Line newspaper has said that companies controlled by state governments secured lucrative blocks and used the same to favour private miners or end users of coal.
“Theoretically, it can be assumed that public sector companies will pass on full benefits of asset allocation to the nation, either in terms of cheap electricity, providing coal to smaller consumers at a fair price, or paying handsome dividends to the government,” the report says.
“Starting from 1993, public sector undertakings (PSUs) were offered nearly half of the 195 blocks allotted so far, at free of cost. In comparison with the private sector, the State sector was offered bigger assets — 70-odd companies, out of a total of 289 allottees, grabbed approximately 60% of the geological reserves — and, on a priority basis. Barring a couple of Central government undertakings, nearly 90% of such assets went to State Government-owned companies. The biggest beneficiaries are the six coal-bearing states of West Bengal (11), Orissa (4), Chhattisgarh (8), Jharkhand (10), Madhya Pradesh (10) and Maharashtra (5), together cornering nearly half of the allocations through this route. Among the non-coal-bearing states, Karnataka is largest gainer with six captive assets.
The asset distribution coincided with the rise of a section of private miners — most of them unlisted and enjoying the strong backing of local politicians. They entered into mine development and operation (MDO) contracts with PSUs. Usually, PSUs enter into a minority joint venture (26:74) with the private miner. The joint venture in turn holds the mining lease, making it difficult for the PSU to change the miner in the event of any dispute. What’s more, details of sourcing arrangements between the PSUs and the private miner-run ventures are rarely made public,” the report goes on to say.
“State-owned companies allowed private miners to tap part of the benefit accruing from access to a captive asset free of cost. A case in point is West Bengal. Beginning mid-1990s, the State generation utility entered agreements with a private miner—EMTA group. Under this arrangement, the cost of sourcing captive coal is 19.5% cheaper than the price of identical varieties of coal produced by Eastern Coalfields (ECL),” the report says. “The sacrifice is made by the end consumer of electricity, who pays an unduly high price for fuel sourced from a captive asset. The state utility so far sourced nearly 4-5 million tonnes of coal a year, from its four captive assets, through this route. The anomalies came to light recently, when the new State government appointed a consultant to switch over to cost-linked pricing formula for developing new assets.”
“The possibility of unearthing a major scam may increase manifold, if one takes a closer look at the asset utilisation pattern of the State government-owned commercial miners. A preliminary estimate suggests that commercial miners were allotted approximately 43 assets, nearly half of the total allotments to PSUs. Of these, nearly 34 blocks went to six coal-bearing states. The top awardees in this segment are Madhya Pradesh State Mining Corporation (10) and Jharkhand State Mineral Development Corporation (8). Miners from Bengal and Chhattisgarh were awarded 5 assets each. Even smaller States like Assam or Arunachal Pradesh were not deprived. Available information suggests that in a majority of the cases, the State-level miner re-‘allotted’ mines in favour of select private sector players who are meant to be end-users of coal. It implies such mines were practically converted into captive assets of a chosen few,” the report further adds.
The coal ministry has contested before a parliamentary panel the calculations made by the Comptroller and Auditor General (CAG) while estimating the loss to the exchequer from the allocation of captive coal blocks to private companies, the Press Trust of India (PTI) said in a report.
The coal ministry said that the CAG’s estimate of a loss of Rs.1.86 trillion is “flawed on “basic fundamentals” related to the geological sector.”
“It also said that the “basic intent” of the government behind “such allocation” of coal blocks was to induce rapid development of infrastructure by involving the private sector to invest in identified priority sectors.
Taking into account the average sale price of all grades of coal of Coal India Ltd (CIL) in opencast mines as well as average cost price of all grades of coal in the PSU and adding additional financial costs, the CAG has calculated a financial gain of Rs.1,85,591.34 crore to private parties. The auditor is of the view that a part of this financial gain could have been tapped by the government by taking timely decision on competitive bidding for allocation of coal blocks,” the report said.
“In its response to the CAG report, the oal ministry has told Parliament’s Public Accounts Committee that transparent procedures were observed while recommending allocations by following a “broad policy framework”. “It is to be stated that the calculation of the said financial gains were flawed on certain basic fundamentals related to the geological sector,” the ministry has told the PAC in a written submission. The financial gains to private parties have been computed on the basis of the difference between the average sale price and the production cost of the CIL, as well as estimated extractable reserves of the allocated coal blocks, the ministry said. “This computation of extractable reserves based on averages would not be correct in the geological sector. Moreover, as the coal blocks were allocated to private companies only for captive purposes for specific end-uses, it would not be appropriate to link the allocated blocks to the market price of coal,” the report cited the ministry as saying.
Meanwhile, in a report DNA newspaper said that the “ministries of power and coal are at loggerheads on the issue of import of coal by Coal India Ltd for private sector companies.”
“While the ministry of coal has accused the ministry of power of mooting policies that will harm the interests of the PSU Coal India, the ministry of power is defending its policies in the garb of larger interest of the country and power secretary, Uma Shankar has asked the CIL board and its directors to ‘do some soul searching on their responsibility and commitment’. In a letter, S.K. Srivastava, secretary coal has lambasted the ministry of power for mooting the proposal in which Coal India is required to import 20 mt of coal for the Independent Prower Producers. The proposal will cost the Coal India a whopping Rs.3,000 crore in 2012-12 itself. Over a period of 20 years, these losses would amount to Rs.60,000 crore at the current level,” the report said.
DNA newspaper reports that coal minister Shriprakash Jaiswal “will have to explain why his ministry slept over requests from the CBI since 2010 to inquire a corruption case against CMD of Western Coalfield Ltd (WCL).”
“Jaiswal also sat over the vigilance report in the case for over a year,” the report said.
“The case pertains to the submission of a fake bank guarantee worth Rs.2.24 crore by Ms Shri Sai Construction Company for the contract of diversion of the Motta Ghat canal at the Padmapur opencast mine of Chandrapur area, WCL worth Rs.14 crore. The tender was passed in 2007. Documents accessed by DNA show that in March, 2010, the CBI apprised the ministry about the misconduct of WCL officials. It also wrote to the ministry, seeking permission of the central government to conduct an inquiry on the role of DC Garg, CMD of WCL, and a joints-secretary level official. Three months later, the CBI sent a reminder to the ministry about carrying out an inquiry. Failing to get a response from the ministry, the CBI wrote to the Central Vigilance Commissioner (CVC) in October 2010. The CBI said even the agency’s director had written to the coal ministry and sought approval for the inquiry. The letter, accessed by DNA, said: “The director, CBI, has also written a letter to the secretary, coal ministry for seeking approval under section 6A of the Delhi Special Police Establishment Act to register a case of criminal misconduct against DC Garg, but so far no action has been taken. Mr Garg continues to enjoy his posting in the midst of all the allegations.” Following this, the CVC asked the ministry either to grant permission or explain reasons for not doing so. The ministry finally referred the matter to the Chief Vigilance Officer (CVO) of the WCL in December 2010,” the report further added.
25 September 2012
In a fresh turn of events in the coal block allocation saga, officials of the steel ministry at the centre and those belonging to the Maharashtra government, could come under the scanner of the Central Bureau of Investigation (CBI), which is now probing all allotments since 1993.
“CBI is probing the role of officials of Maharashtra government and Union steel ministry in connection with positive recommendations given to Grace Industries for allocation of coal block despite alleged misrepresentations in the net worth and other details. CBI sources said the company, which had applied for captive coal block for its sponge iron plant in Maharashtra, had allegedly received positive recommendations from state government as well as officials of steel ministry. They said the company has allegedly inflated its networth nearly 10-fold to claim eligibility for Lohara East coal blocks,” the PTI reported.
“The sources said such a major increase in the net worth could have easily been noticed by the officials involved in the screening process but they allegedly chose to ignore it and gave positive recommendations which helped the company in bagging the offer. The sources said the company had allegedly inflated its sponge iron plant capacity and projected nearly double capacity of 12,0000 tonnes per annum whereas actually it was only 60,000 tonnes per annum,” the report further said.
Meanwhile, Rediff.com has reported that the CBI is unlikely to question central vigilance commissioner (CVC) Pradeep Kumar in connection with the coal block allotments. “Kumar, as special secretary in the coal ministry, was a member of the coal block allocation screening committee in 2006. A CBI source told Rediff.com that the agency is not seeking any response from Kumar,” the report said.
“Technically-speaking, the CVC is the ‘boss’ of the CBI after the Vineet Narayan judgement, which laid the framework for the CBI’s independent functioning.The CBI is handling the cases related to the coal scam, which have been forwarded to it by the CVC. However, so far, investigations into the coal scam are highly superficial and limited to small fishes, the source well-versed with the investigation says, adding that it is unlikely to go deeper into the political connections,” the report added.
“The detail that has emerged is that the accused Jayaswal brothers met then Minister of State for Coal Santosh Bagrodia when they were unable to get free coal blocks. It was only after their meeting with Bagrodia that their application was approved. In the coal scam it is said that the screening committee, which was supposed to weigh the applications before allotting coal blocks, was run on whims and fancy of the ministers. CVC Kumar had attended the screening committee meetings, including the one that approved the firm Grace Industries’ application. The firm has now been booked by the CBI,” the report further said.
Earlier in the day, the DNA newspaper, in a report has questioned how at least 1800 acres of coal block was “was literally handed on a platter to the Tata Iron & Steel Company Ltd in 2005.”
“Following Tisco’s requests to get a chunk of the 3,070-acre Hurdag coal block in Jharkhand, the ministry of coal (MoC)made the allocation without so much as consulting CCL. The land for the block was acquired by CCL, a subsidiary of Coal India Ltd, in 1981 under the Coal Bearing Areas (Acquisition and Development) Act, 1957, which forbids transferring such land to others. Despite completing the land acquisition and rehabilitation of the project-affected people, the PSU was compelled to hand over 1,879 acres of the block to Tata Steel for its Jamshedpur unit’s coal requirement of 5 million tonnes per annum,” the DNA report said while detailing the entire process of how the company got the block.
Meanwhile, the Central Bureau of Investigation (CBI) said on Monday that it will investigate all coal block allocations since 1993, Mint reported.
“The CBI said at least 50 additional companies could be probed as part of the widened investigation. The decision follows the Central Vigilance Commission (CVC) on Monday forwarding a letter written by seven parliamentarians demanding an investigation of all coal block allocations since 1993 to the CBI,” the report said.
24 September 2012
A report in The Indian Express newspaper has said that coal minister Shriprakash Jaiswal “ sat on a file that sought his direction on keeping captive coal block allocations on hold until the new competitive bidding system was launched.”
“The then coal secretary, C. Balakrishnan, sent the file on 20 July 2009 seeking the minister’s decision on ‘whether allocation of coal blocks should continue as per the extant policy in practice or this should await enactment of MMDR Amendment Bill 2008 which seeks to introduce competitive bidding system’. The query was specific to allotting coal blocks already awarded by the screening committee as the proposal also asked Jaiswal to decide if the screening committee route could be continued for the remaining blocks. ‘Decision is required whether the remaining blocks should be further sub-divided/ earmarked for allocation under the government company dispensation and screening committee routes separately,’ it said. The reason for seeking the minister’s opinion on putting the process on hold was the standing committee’s direction that all allotments be stopped until a review was conducted into the progress of work in coal blocks already allotted. ‘The committee has suggested that firstly, the ministry should review the status of the development of coal blocks already allocated and in the event of coal blocks not being developed as per the prescribed time frame, these should be de-allocated and only such blocks should be disposed of through auction. Only on completion of this exercise, new blocks may be allotted through competitive bidding,’ said the ministry’s proposal,” the newspaper report further detailed.
In another report DNA newspaper has detailed how “three influential and politically connected families—Jindals, Jayaswals and Jajodias” multiplied their wealth after they were allocated coal blocks.
“Is it possible to quantify the benefits to the alleged beneficiaries of the government’s coal block largesse?
Yes. Just use the market capitalization yardstick. By that measure, the worth of three influential and politically connected families—Jindals, Jayaswals and Jajodias—have rocketed by a whopping 2,500% to 23,000% in 10 years starting March 2002. It cannot be a coincidence that firms owned by these three families bagged 10% of all coal reserves allotted after the captive mining sector was opened to private players in 1993. Since that year, 195 coal leases were handed to 289 firms (several operating in consortium) with total reserves adding up to 43.35 billion tonnes,” the report notes.
“In the allocations, Congress MP Naveen Jindal’s company, Jindal Steel and Power Ltd (JSPL), emerged as the biggest beneficiary. It was allocated nine coal blocks with geological reserves of 2.58 billion tonnes, or 6% of the total reserves allotted. Jindal’s brother-in-law Sandeep Jajodia, the promoter of Monnet Ispat and Energy Ltd, was allocated five with geological reserves of 337 million tonnes, or 0.78% of the total reserves allotted. Nagpur-based Jayaswal family that operates two group companies—Jayaswal Neco and Abhijeet Group (that has close links to Congress MP Vijay Darda)—was allocated 10 with geological reserves of 923 million tonnes, or 2.13% of the total reserves allotted,” it further notes.
India Today said that public sector companies, including Gujarat Mineral Development Corporation (GMDC), could now be stripped off the coal blocks they were allotted.
“Sources in the coal ministry told Mail Today that the Naini block in Chhattisgarh, which was allocated jointly to GMDC and the Pondicherry Industrial Promotion Development and Investment Corp. Ltd (PIPDIC), could be deallocated due to the delay in production,” the report said.
Meanwhile, at least two companies whose coal blocks were taken away, have moved court against the move, The Economic Times said.
“SKS Ispat and Power, linked to tourism minister Subodh Kant Sahai, and Bhushan Steel have challenged the de-allocation of their coal blocks in the Delhi high court, even before they received any formal communication about cancellation,” the report said.
“A senior coal ministry official said the government expects more companies to follow suit once de-allocation letters are issued to them. The government is likely to cancel the allocations of 13 coal blocks affecting 28 private companies, based on the IMG’s recommendations,” the report further added.
In an interesting piece, The Times of India has asked whether coal blocks were allocated to “mine coal or money?”
The newspaper article has sought to question the allocation of coal blocks in Maharashtra.
“Not only have blocks given to state mining corporations (SMCs) helped erase their losses, they have also been money spinners for SMCs’ business partners. The state government-owned Maharashtra State Mining Corp. Ltd (MSMC) permitted its JV partner Sunil Hitech Engineers Ltd (SHEL) to transfer its stake in Adkoli block for a hefty consideration even before a single tonne of coal could be mined,” the piece notes. “Actually all three blocks allotted to MSMC are far from production stage even five-six years after approval and well after prescribed time. The mining company, however, has left no chance to make money by selling the blocks to private parties and is now allowing them to do the same.”
“The MoC allotted Adkoli block in Yavatmal district of Vidarbha to the MSMC on 2 August 2006 for producing coal and supplying it to small scale industries etc within 36 months from date of approval. The MSMC earned an upfront profit Rs.75 crore by auctioning the block in 2008 to SHEL which has no experience in coal mining. MSMC formed a JV with SHEL by the name of MSMC Adkoli Natural Resources Ltd on 21 November 2009. MSMC holds 51% and SHEL 49% of this JV. As far as current status of the block is concerned, the land acquisition, mine plan, process etc are yet to complete. According to the directors’ report of Sunil Hitech Energy Pvt. Ltd (SHEPL), subsidiary of SHEL, for year ending 31 March 2012, 49% equity was transferred to Jaypee Group, a big cement manufacturing company. The report mentions, “in terms of JV agreement dated 21 November 2009 entered into between SHEL and MSMC, MSMC Adkoli Natural Resources Ltd has been formed... With approval of MSMC, 49% equity shares of SHEPL, owned by SHEL, have been transferred to Jaypee Group entity.” The same report states that the total shares of SHEPL were 1,87,20,000 with a face value of Rs.10 each. As on 31 March 2012, SHEL had 24,42,960 (13.05%) shares, SHEL Investments Consultancy Pvt. Ltd—71,04,240 (37.95%) and Jaypee Development Corp. Ltd—91,72,800 (49%). Going only by face value of shares, SHEPL raised Rs.9.17 crore from the deal executed in 2011-12. As on 31 March 2011, SHEL was having 1,16,15,760 (62.05%) and SHEL Investments Consultancy Pvt. Ltd—7,104,240 (37.95%) in SHEPL. The report mentions SHEPL paid Rs.18.41 crore sweat money to the MSMC as on 31 March 2011, and Rs.37.06 crore as on 31 March 2012. SHEPL has short-term borrowings (non-interest bearing) of Rs.5.89 crore from Jaypee Development as on 31 March 2012,” the piece further goes on to say.
23 September, 2012
The Central Bureau of Investigation has found that coal firms had fabricated data for preferential allotment of coal blocks, India Today reports.
“Shocking fabrication of facts has come to the fore in CBI raids on private firms linked to the alleged coal scam at seven locations across the country on Saturday. The agency has registered cases against two more private firms—Grace Industries in Nagpur, Maharashtra and Vikash Metal and Power Limited in Kolkata—in the coal block allocation scam,” reports the magazine.
“According to the CBI, Grace Industries was allocated the Lohara (East) block in Maharashtra after it showed an inflated net worth of Rs 120 crore. The company’s actual net worth, as revealed by the CBI investigation, is not more that Rs 2.5 crore. Vikash Metal, on the other hand, got a coal block in 2008 after it claimed to have been allocated a 300-acre plot in Begusarai, Bihar, for setting up a steel plant. The CBI sleuths, however, found that the land allocation had been cancelled by the Bihar area development authority a year before the claim was made. FIRs have been lodged against both the companies under sections 120(B) (criminal conspiracy) and 420 (cheating) of the Indian Penal Code. Owners of Grace Industries and unnamed government officials have also been booked under Prevention of Corruption Act (for alleged bribery). CBI sleuths raided the offices and house of the owner of Grace Industries, Mukesh Gupta, in Nagpur’s Dhantoli area. The company is co-owned by Gupta’s wife, Seema. Grace Industries is also accused of misquoting the production capacity of its sponge iron plant,” the report goes on to say.
The Economic Times newspaper has said that “JSW Steel’s plans to set up a 3 million tonnes steel plant in West Bengal is likely to get further delayed following the government decision to deallocate Gourangdih ABC coal mine, allotted jointly to the Sajjan Jindal-led firm and Himachal EMTA Power Ltd.”
Citing a senior company official, the report said that “coal from the deallocated Gourangdih block was supposed to feed a 300 MW captive power plant for the proposed steel project in West Bengal and construction activities at Salboni—the plant site—was supposed to begin in next one or two months. However, post deallocation, the company will be left with no coal for the proposed power plant and would have to rework its project development plan.”
Meanwhile, DNA newspaper says that despite “stiff opposition and pleas from the state-run Coal India Ltd, the Union government in 2006 allocated two coal blocks to the Sasan Ultra Mega Power Project (UMPP) in Madhya Pradesh.”
“Officials had opposed the deallocation of the blocks from the Maharatna public sector undertaking. Their suggestion for alternative coal blocks for the 4,000MW Sasan project, subsequently awarded to Reliance Power, was also ignored, delivering a telling blow to CIL’s coal production programme,” the report notes.
22 September, 2012
The Central Bureau of Investigation (CBI) on Saturday registered two fresh cases in its investigation into the allotment of coal blocks, The Economic Times newspaper reported.
“The agency has booked Grace Industries and Vikash Metals and Powers Ltd for fudging financial statements to get coal blocks,” the report said citing CBI sources.
“The sources said raids are being carried out at seven locations including Kolkata, Nagpur, Asansol, Purulia and Chadarpur. Sources said cases have been registered against promoters and management these companies and unknown government officials” the report added.
In a separate report NDTV news channel said “the owner of Grace Industries—Mukesh Gupta’s Dhantoli house and office premises in Gupta house were among those being raided. Mr Gupta had allegedly sold mine blocks allocated to him in Lohara near Tadoba to Sunvijay Rolling mills, but the block was de-allocated following objection from the Union Forest and Environment ministry.”
“In Nagpur, raids were conducted at the Gupta Metallics owned by Mahesh Gupta. Its bank guarantee for captive block at Malegaon was recently recommended for seizure by the inter-ministerial panel. The owners of these companies have been charged with cheating, criminal conspiracy and under sections of Prevention of Corruption Act,” the report added.
In an interesting OpEd piece, The Hindu newspaper has sought to analyse the correctness of the methods the Comptroller and Auditor General (CAG) used to reduce the loss it estimated in its draft report on coal block allocations.
“Tough questions could emerge from the wide gap between the initial Rs.10.67-lakh-crore revenue loss estimate presented in a draft report in March 2012 and the whittled-down Rs.1.86-lakh-crore figure presented in the final report,” the newspaper says. “The CAG can argue that the handling of the coal audit borders on conservative considering reports that the Madhya Pradesh State Mining Corporation auctioned six coal blocks in November 2008 at a minimum bid price set at 200 per cent of royalty, which currently ranges from Rs. 127 to Rs. 180 per tonne. Though the winning bids ranged from royalties of Rs. 700-Rs. 1,200 per tonne, the CAG, in its report has factored only a net gain of Rs. 295.41 per tonne of coal.”
The article points out that a “closer look at the CAG’s calculation methodology is critical, as it could have a bearing on the values of coal blocks when they are finally auctioned and on the coal reserves extracted from a particular coal block.”
“The CAG report estimates windfall gains with respect to private parties alone, excluding coal blocks allocated to government companies and their joint ventures with private parties. This effectively shaves off gains of Rs. 5.88 lakh crore, reducing its Rs.10.67-lakh-crore draft report loss figure to Rs. 4.79 lakh crore. Even in the case of a 100-per-cent government company, the mine developer and operators (MDOs) would mostly be private parties with whom the windfall gains would have to be shared. The CAG had objected to the lower price at which the Bhatgaon II Extension block was auctioned to a private company in Chhattisgarh. Similar controversy is brewing over the Pakri-Barwadih coal block allocated to NTPC where the winning MDO edged past a public sector company under the administrative control of the Coal Ministry. The family of the then Minister of State for coal reportedly had a 10-per-cent stake in the MDO that eventually won the contract,” the report says.
Coal secretary S K Srivastava has told a parliamentary panel considering the report of the Comptroller and Auditor General (CAG) on the coal block allotment issue, that the ministry does not have in its possession the minutes of all the screening committee meetings, The Times of India reported.
“The coal ministry does not have a full record of minutes of the screening committee, which allotted coal blocks explaining why hundreds of applications were rejected while some were preferred, Parliament’s Public Accounts Committee (PAC) was told on Friday. Responding to questions posed by PAC members, coal secretary Sanjay Srivastava told the panel examining the CAG report on Coalgate that minutes could be with ministries concerned. These, in some cases, might be with the power ministry. But a power ministry official present at the committee deliberations was unable to clearly state if the department had a record of the relevant minutes either, and suggested it might be with the energy coordination panel,” the report said.
“In acrimonious exchanges, Congress MPs also blamed the CAG report on Coalgate for the rupee’s devaluation. This was countered by BJP’s Prakash Javadekar who said the devaluation took place much before the report was presented to Parliament. Coal ministry officials were queried in the context of the Comptroller and Auditor General’s (CAG) assertion that no record could be found that sets out reasons why certain private firms were allotted coal blocks ahead of scores of other applicants for a particular mine. In one case, two applicants were shortlisted from 108. PAC chair Murli Manohar Joshi asked the ministry to provide the PAC with the minutes to which officials could not clearly state if the record is available,” the report further added.
Meanwhile, The Indian Express reported that the CAG had “softened his position on the process of allocation of coal blocks, saying he never pitched for introducing the competitive bidding mechanism for allocating mines. He has also claimed that coal minister Sriprakash Jaiswal has contradicted his own ministry’s reply to Parliament on auction of coal.”
“We have at no point of time suggested that a policy of competitive bidding should have been introduced”, the CAG, Vinod Rai has told the Public Accounts Committee of Parliament examining the audit report on allocation of coal blocks. Instead the national auditor has merely made observations based on the policies as prevailing at any point of time. The CAG’s answer is significant as the UPA government has accused him of exceeding his mandate by suggesting there was a mistake in allocating coal through a screening committee, instead of through an auction,” the report further said.
“In his deposition, the CAG has also quoted a reply to an unstarred question in Lok Sabha made in November 2007, where the then coal minister had argued for auction of coal. “Rational bidding is unlikely to increase the cost of coal when compared to notified price of Coal India”, the minister had noted. Jaiswal has recently claimed that auction, while necessary, will, however, make coal prices shoot up and therefore raise prices of commodities like electricity and cement,” the report added.
21 September, 2012
The Central Bureau of Investigation (CBI) could soon begin examining coal block allotments since 1993. A Press Trust of India (PTI) report says that coal minister Shriprakash Jaiswal “has sought a CBI probe into mines allocation since 1993.”
“Seeking the CBI probe, he has also forwarded a letter written by seven parliamentarians to the CVC that blocks allotted between 1993 and 2004 (NDA rule) should be investigated by the CBI, as favours were done to parties under political pressure. The missive by Jaiswal was sent on Wednesday along with the letter by the MPs written on September 5,” the report said.
The Central Bureau of Investigation (CBI) is investigating the power ministry in connection with the allotment of coal blocks during the time when Sushilkumar Shinde was the power minister, Business Standard newspaper said.
“It has sent questionnaires to the ministry, to know the basis on which it had recommended names of companies to the screening committee for allocation. Senior CBI officials indicate once the questionnaires are answered, it is likely the agency will call some officials for questioning,” the newspaper report said.
“Earlier, CBI sent questionnaires to the coal ministry as well, on details of the decisions and recommendations made by the latter. Interestingly, CBI has asked for details pertaining to the period when Shinde was minister; he now heads the ministry of home affairs,” the report added.
“The case of Vini Iron and Steel Udyog, allocated the Rajhara (North and Eastern) coal block, was neither recommended by the Jharkhand government or the steel ministry initially. Yet, at the 36th screening committee meeting, the chief secretary of Jharkhand had recommended allocating the block to Vini in place of Zoom Vallabh Steel, which had been recommended by the steel ministry,” the report further noted.
At least seven Congress members of parliament have called for a CBI probe in the allotment of coal blocks since 1993, The Indian Express reported.
“To counter the BJP’s attack over the alleged malpractices in the allocation of coal blocks between 2004-09, seven Lok Sabha MPs of the Congress have urged the Central Vigilance Commission (CVC) to ask the CBI to probe allotments of all coal blocks since 1993. CVC is understood to be preparing to convey the investigating agency to widen the ambit of its probe. By this the probe will also cover the period during which the BJP-led NDA government was in power,” the report said.
“In a letter to CVC Pradip Kumar, written on September 5, seven Congress MPs cited the CAG report, which quoted the coal ministry’s statement that till 2004 there was no clear criteria for allocation of coal mines, most of which were allocated to applicants who produced letters of recommendations from the coal-rich states. “It therefore appears that all coal blocks allotted since 1993 should be investigated by the CBI specially probing the system through which states selected private companies,” the MPs said in their letter. They said that the CBI should ascertain the system used by the states in selecting firms for coal block allocations between 1993-2004,” the report further noted.
20 September, 2012
The inter-ministerial group (IMG) looking into coal block allocations on Thursday recommended that blocks allocated to several companies including Grasim and Gujarat Ambuja be taken away, Mint reported.
“The panel recommended the cancellation of the Dahegaon/Makardhokra IV coalfield allocation in Maharashtra, the official said, declining to be identified. The ministry’s list of allottees shows the coalfield is held by Gujarat Ambuja Cement with Lafarge India Pvt. Ltd. and IST Steel and Power Ltd. The coal was meant to be used in cement-making. The second coalfield allocation recommended for cancellation is Bhaskarpara in Chhattisgarh, which, according to the ministry’s list, belongs to Grasim Industries and Electrotherm (India) Ltd,” the report said.
“The group of government officials will meet in October to decide on the coalfields owned by government companies that form a part of a list of 58 blocks that were served show-cause notices and was reviewed by the panel,” it added.
Meanwhile, the Central Bureau of Investigation (CBI) grilled Abhijeet group chairman Manoj Jayaswal on Thursday, Press Trust of India (PTI) reported.
“Unlike yesterday, when four members of Jayaswal family were questioned together, the agency today grilled Manoj alone for nearly eight hours about his association with Lokmat Group led by Congress MP Vijay Darda, ILFS and other such companies,” the report said.
The coal ministry now wants penalties to be imposed on mines that have been named in the first information reports filed with the Central Bureau of Investigation (CBI), a report in The Times of India said, citing coal secretary S.K. Srivastava.
“Firms that were allocated coal blocks, which are now under the CBI’s scanner, may find their allotments cancelled despite the legal proceedings against them being at an initial stage. The coal ministry plans to seek advice from the law ministry on whether firms against whom FIRs have been filed can be subjected to penalties that can include forfeiture of bank guarantees and de-allocation of coal blocks,” the report said.
CBI has filed an FIR against five companies—AMR Iron and Steel, JAS Infra Capital, JLD Yavatmal Energy, Navbharat Power and Vini Iron and Steel, the report further noted.
19 September, 2012
In an important development, the coal ministry has now said that power produced from cheap coal must not be sold at market rates, The Hindu Business Line newspaper has reported. The report says the coal ministry “wants the power ministry to put in place a comprehensive ‘regulatory and monitoring mechanism’ to ensure that electricity from cheaper domestic coal is sold at regulated rates to state electricity distribution companies (discoms).”
“The coal ministry, which is preparing the grounds for auctioning coal mines, will add this clause in the allocation letters. As of now, the letter merely states that bidders should participate in the bids for sale of power to end-use customers, according to Power Ministry guidelines,” the report says.
“After discussions with the law ministry, the coal secretary, S.K. Srivastava, wrote a letter to his counterpart in the power ministry, P. Uma Shankar, on 4 September. According to the coal ministry, it needs to be clarified whether mere participation in the bidding process would ensure that the benefit of cheaper coal will be passed on to consumers, as observed by the Comptroller and Auditor General of India in its audit report,” the news report further says. “This would be a big dampener for companies such as Jindal Steel and Power Ltd (JSPL), which are selling electricity at market rates even after sourcing coal from captive mines. JSPL, promoted by Congress member of Parliament, Naveen Jindal, operates a 1,000MW coal-fired plant in Raigarh, Chhattisgarh on a ‘merchant basis’.”
Meanwhile, the inter-ministerial group (IMG) looking into the issue of coal block allocation, has recommended that three more blocks be deallocated and the bank guarantees of four more be forfeited, Mint reported. The report also sought to examine why JSW Steel Ltd lost its coal block while some other big corporates managed to keep theirs.
“JSW Steel Ltd lost its Gourangdih ABC field in West Bengal for having spent too little on it, but Reliance Power Ltd’s (R-Power) 4,000 megawatts (MW) Sasan power project could keep its Mohar and Mohar Amlori Extension coalfields in Madhya Pradesh because they showed they had started mining,” the report said, citing a coal ministry official. “Tata Steel Ltd’s Pachmo coalfield in Jharkhand was saved as its fate is intertwined with that of the Kotre Basantpur field, also in the same state, as the company submitted a joint mining plan for the two blocks, the official said. One of the two fields falls in the environment ministry’s so-called no-go zone—forest areas where no industrial activity is permitted.”
In what could drag another political heavyweight into the coal block controversy, The Economic Times reported that Orissa chief minister Naveen Patnaik lobbied with the Prime Minister to get coal blocks allotted to corporates.
“Contrary to his tall claims, Odisha chief minister Naveen Patnaik hasn’t favoured competitive bidding in coal blocks allocation. Worse, he also lobbied for corporates and written letters to none other than Prime Minister Manmohan Singh requesting favours for two large Indian conglomerates, ahead of the 2009 general election. His letters to the prime minister, which has been reviewed by ET, have sought “necessary support” to companies such as Naveen Jindal-led Jindal Steel and Power Ltd and the Tata Group for setting up “coal to liquid” projects in the state; in such “clean-energy” projects, coal is reduced to syngas, which is then condensed to produce fuel that is said to be far cleaner than conventional fuels. Ironically, the eastern state saw major protests against such projects which many eco-activists and scientists allege are highly polluting,” the newspaper report said.
“JSPL and a Tata-Sasol JV, called Strategic Energy Technology Systems, were allotted 1.5 billion tones of coal each to set up the country’s first two CTL projects in Angul and Dhenkanal districts, respectively. JSPL won the Ramchandi promotional block and the Tata-Sasol JV Arkhapal and Srirampur coal blocks. The two were chosen over 28 other applicants,” the report further noted.
19 September, 2012
The Hindustan Times newspaper said on Tuesday that the Prime Minister’s Office (PMO) is worried that the coal block controversy may hit the power sector.
“The Prime Minister’s Office has shot off missives to the ministries of coal and power to ensure adequate fuel supplies to power projects lined up for commissioning in the next four-five years. This assumes importance amid the raging controversy over coal mines allocated to private firms and fresh details that show the government’s own departments and ministries are delaying critical projects with assured supplies from state-owned Coal India Limited (CIL) and its subsidiaries. Investments worth Rs.1,24,745 crore are stuck due to various regulatory, procedural and environmental hurdles, banks told the finance ministry last week. According to the power ministry, nearly 66,230MW out of the 84,756MW of proposed power capacity addition planned in the next few years is coal-based, but fuel supply agreements have been signed only for 16,000MW,” the report said
Tourism minister Subodh Kant Sahai has said that anyone making charges against him on the coal block issue is “committing contempt” of court, The Week magazine has said.
“Tourism Minister Subodh Kant Sahai says he is being vilified with charges that have already been examined by a High Court and thrown out with costs. And that Arun Jaitley, leader of the BJP which is now making the charges against him, was the lawyer who had represented the opposing party in one case. Now, if anyone makes the charge that Sahai lobbied for SKS Ispat, well, they are committing contempt. The charge being raised against Sahai is that he wrote to the Prime Minister lobbying for SKS Ispat and Power Ltd, which had applied for two coal blocks for its steel plants in Chhattisgarh and Jharkhand; and that his brother Sudhir Kumar, director of SKS, was present in the 36th screening committee that allocated two blocks of coalfields to SKS. It was also hinted that SKS stood for Subodh Kant Sahai,” the magazine report said.
“According to Sahai, the controversy started not out of the CAG report, but out of a business rivalry which ended in a court case in which he had already cleared his name more than two years ago. The rivalry was between Prakash Industries Ltd, promoted by Ved Prakash Aggarwal, brother of BJP supporter Jai Prakash Aggarwal, and SKS, which was promoted by Anil and Deepak Gupta. Sahai admits to have written a letter to the Prime Minister, but there was nothing mala fide in the letter. It was just like any MP writing to a minister regarding his constituency. “I wrote for the state of Jharkhand to which I belong, and where no development has taken place. In spite of my letter, the blocks allocated were in Chhattisgarh,” said Sahai. According to him, the Delhi High Court, which had heard the petition by Prakash Industries, had found that the letter “has nothing to do with the allocation of coal blocks for a power project.... The decision to make the allocation... was made at the 35th meeting of the screening committee on 13th September 2007 long before the above letter dated 5th February 2008.” Sahai also says that much is being made about his brother’s presence at the meeting of the 36th screening committee held on February 7, 2008. “You read the judgment,” says Sahai. “It clearly says in para 57 that ‘that meeting was not about making allocations to the power sector at all,’ ” the report further said.
In an important development, aimed at bringing transparency in the auction of coal blocks, the coal ministry “has circulated to the coal-producing state governments and union territories inviting their comments on the rules for auction of coal assets under competitive bidding which clearly states that allocation of coal blocks to companies for specified end users other than power shall be done through competitive bidding process in which even government companies will be allowed to participate”, The Hindu newspaper reported, citing an internal government note.
“Seeking to frame exhaustive and broad guidelines for ensuring transparency in allocation of natural resources, the coal ministry has also engaged the services of a professional consultant for this purpose and the competitive bidding is likely to take off only early next year. The government has already identified 54 coal blocks for offering under the competitive bidding process,” the report further said.
This development comes even as the inter-ministerial group (IMG) looking into the issue of coal block deallocation has recommended to the coal ministry the cancellation of one coal field and the forfeiture of at least two bank guarantees, including that of Jindal Steel and Power Ltd (JSPL),
SPL’s Jitpur coalfield is in Jharkhand with reserves of 81.09 million tonnes (mt) and the company has said it needs the block to feed a power plant. It did not comment till the time of going to press.
“The group also recommended the cancellation of Bihar Sponge Iron Ltd’s Macherkunda field in Jharkhand which has reserves of 23.86mt of coal. No officials were available in the office of Bihar Sponge Iron to comment. The second block on which IMG recommended forfeiture of bank guarantee is Chitarpur in Jharkhand belonging to Corporate Ispat Ltd,” Mint said in a report.
Meanwhile, the Central Bureau of Investigation (CBI) on Tuesday questioned Arvind and Manoj Jayaswal of AMR Iron and Steel, a Press Trust of India report said. “In a related development with the probe, the agency has recommended extension of tenure of DIG Ravi Kant, an Orissa cadre 1998-batch IPS officer 1998, who is supervising the Coalgate probe,” the report added.
Meanwhile, in an interesting report on Tuesday, Mint had detailed how firms follow unfair practices to source coal from Coal India.
“Such supply—termed a coal linkage—pertains to only those projects that do not have a captive coal block and instead need to source coal commercially from state-owned Coal India Ltd (CIL)—the only company allowed to undertake commercial mining of the commodity in the country. To take advantage of the discounted price offered by CIL for such assured supply, the developers of power plants allegedly made false claims regarding the order of equipment, financial status, land acquisition and water supply,” the report said.
“CIL has assured supply to 172 power projects through so-called LoAs or letters of assurance. The generating capacity involved is 108,878 megawatts (MW). The number doesn’t include assurances for projects commissioned before March 2009. To be sure, CIL has been unable to meet its commitments. Several firms assured of coal supply claimed to have placed orders for power generation equipment with manufacturers to strengthen their candidature—only, these were not really orders,” the report further said.
CIL has said that it would be willing to take up the coal blocks that have been deallocated and develop them.
“We are anticipated to get these blocks. If CIL gets these blocks, we will come up with an action plan first on how to go about it. CIL is well prepared to produce from these blocks,” S. Narsing Rao, chairman and managing director, CIL, told Business Standard newspaper. “There has been no assurances from the Centre on this. This is our understanding we will get most of the blocks.”
17 September, 2012
In an interesting report, Business Standard detailed how the residents of Bander village in Chandrapur district in Maharashtra were not satisfied with the Central Bureau of Investigation (CBI) probe against AMR Iron and Steel, arm of the Nagpur based, Abhijeet Group.
“The probe is for alleged misrepresentation of facts while seeking allocation of the Bander coal block, about 125km from Maharashtra’s second capital, Nagpur. However, the locals are happy at getting another opportunity to raise their concerns against the project, which they say would irreparably damage their livelihood and environment,” the report says. “AMR succeeded in getting the block, allegedly by using political influence, but has has not been able to expedite project development largely due to its inability to get the necessary approvals from village panchayats in the area, such as Bander, Shedgaon, Amarpuri, Shivapuri, Majara Begade and Pitchua.”
“Villagers expect cancellation of the block allotment and, thereby, scrapping of the mining project after the CBI probe is over. However, they add, they’re not simply relying on the probe but are preparing for an agitation against the project,” it further notes.
The Indian Express newspaper said in a report that Congress member of parliament Vijay Darda, “who is under the scanner for his alleged role in coal block allocation scam, wanted to shift the power plant from Maharashtra after his firm got the coal block”.
“Dardas were allocated Fatehpur East at Chhattisgarh in January 2008 for their power plant which was to be completed by October 2013. CBI sources said that during one of the review meetings of coal blocks undertaken by the screening committee, JLD informed that it wanted to change the site of the power plant. The chairman of the committee raised objection as the coal blocks were allocated to JLD for development of a power plant in a joint venture. The CBI, which is soon going to question Darda, suspect that JLD was under pressure from Abhijeet Group’s Manoj Jayaswal to shift the site. As per the details of the screening committee meeting held under the chairmanship of special secretary (coal), the panel remarked: “The block was issued on the basis of application made by the allottee. State government also recommended that location. Now it is not understood why the allottee (JLD) is proposing to change the site from one state to another...” The Maharashtra government also expressed reservation on the decision of JLD to shift the location of the power plant,” the report said, citing officials.
The inter-ministerial group (IMG) looking into the issue of deallocating coal blocks decided on Monday to recommend encashing of the bank guarantees of the Tubed coal block belonging to Tata Power Co. Ltd and Hindalco Industries Ltd, two officials who attended the panel’s meeting said on Monday, Mint reported.
“Tubed, a block in Jharkhand, was allocated to the two companies jointly in August 2007. IMG appeared to not have made any recommendations on cancellations of coal blocks. The meeting will resume on Tuesday when a new set of companies will come under review,” the report said.
The Central Bureau of Investigation (CBI), meanwhile, “questioned Arvind Jayaswal in connection with the alleged misrepresentation and concealing of facts by his company AMR Iron and Steel Pvt. Ltd for getting Bander coal block in Maharashtra”, PTI said on Monday.
“Jayaswal has been named by the agency in its FIR in which it alleged that the company concealed and misrepresented facts that its group firms were already allocated coal blocks and that it was financially eligible to get the block. The agency is likely to call for questioning other directors of the company including his brother Manoj and son of Congress MP Vijay Darda, Devendra who are also accused in the case against the company,” the report, citing CBI officials, said.
The Hindu newspaper says the CBI asked Jayaswal “about his alleged meeting with the then minister of state for coal in September 2008 to claim that his company was not part of the Jayaswal Group, but its equity was held by the Lokmat Group, Abhijeet Infrastructure Ltd and IL&FS. The company had also allegedly admitted before the minister to having got five blocks earlier, though this information was not disclosed while filing the application for the said block”.
“The sources said Mr Jayaswal was confronted with papers showing how his firm concealed and misrepresented equity participation of IL&FS and the Lokmat Group to get the coal block allotted. During the eight-hour questioning, CBI sleuths asked him about the role of government officials who allegedly helped the firm get the coal block,” the report further said.
Meanwhile, Business Standard reported that the fear of deallocation of coal blocks has gripped the 2,250MW Navbharat Power Pvt Ltd. project in Orissa state.
“The Central Bureau of Investigation has filed an FIR against Navabharat Power Pvt. Ltd for selling the company to Essar Power Ltd in an irregular manner after getting coal allocation in Rampia and Dip side of Rampia blocks in western Odisha. London-listed Essar Energy Plc, the holding company for Essar Power Ltd, said as of now it has not taken a decision to shelve the project, but said, it was going slow on Navabharat project with Independent Power Producer (IPP) status,” the report noted.
“Essar Power had proposed to set up a 1,000MW power plant at Paranga near Angul in 2006, but did not make any effort to renew its MoU (memorandum of understanding) with the state government which expired in 2009 and even did not acquire any land for the proposed plant. It later bought 100% stake in Navabharat in two tranches in July 2010 and April 2011 for Rs.230 crore. Meanwhile, the state government said they have not received any update from Essar Power about the status of power plant project progress,” the report said.
“The proposed 2,250MW coal-fired plant at Meramundali in Dhenkanal district requires 1,200 acre land and 5,057 million tonnes coal every year. The IPP venture has been granted water allocation and other pollution board and environment clearances along with coal linkage for 1,050MW power generation apart from allotment of coal block at Rampia, which has been jointly allocated to six companies. In the original MoU, Navabharat had committed to start the first unit of the project comprising 525MW output by Januray 2014. The project may not see the light of the day if the IMG recommends scrapping of its Rampia coal block,” it added.
A report on the India Today website says that home minister and former power minister Sushil Kumar Shinde had written to Prime Minister Manmohan Singh in 2007 requesting him to allocate a coal block to Bhushan Energy Ltd an Orissa-based private company, after the company requested him to do so.
The Indian Express has said in a news report that Congress member of Parliament Naveen Jindal could face more heat over the coal block allocation controversy as two more companies “allegedly associated with him” could come under the scanner of the Central Bureau if Investigation (CBI).
“Nalwa Sponge Iron Ltd and Gagan Sponge Iron Ltd got one coal block each at Gare Palma IV, Chhattisgarh, in 2006, and at Amarkonda Murgadangal, Jharkhand, in 2008, respectively. The two coal blocks were being mined in joint venture with Jindal Steel and Power Ltd (JSPL). Sleuths stumbled upon these firms while analysing private companies which were allocated coal blocks between 2006 and 2009. JSPL has five coal blocks allocated to it —at Gare Palma IV (Chhattisgarh), Jitpur (Jharkhand), Amarkonda Murgadangal (Jharkhand), Ramchandi (Orissa), Urtan North (Madhya Pradesh). The agency’s probe against the private companies revealed that another company, Sandeep Jajodia’s Monet Ispat and Energy Ltd (MIEL), is also linked to JSPL,” the report said.
“Sources said that MIEL managed to get three coal blocks out of which one was allotted to them with JSPL. Jajodia, who is brother-in-law of Jindal, was allegedly helped by them in cornering these coal fields, said officials. The captive coal blocks were taken by Monet and Jindal for development of a power plant,” the report further added. “Investigators found that JSPL applied for 16 coal blocks in its name, seven in the name of Jindal Power, seven in the name of Nalwa, three in the name of Monet, and three in the name of Gagan.”
“He has granted massive favours to the coal-and-loan-scam-tainted Abhijeet Group, helping it set up a 2.5 million tonne per annum (MTPA) integrated steel plant in the Kharsawa-Saraikela district of Jharkhand, which is his constituency. An investigation by DNA shows that Munda not only wrote a recommendation letter to the coal minister for allocating a coal block to Corporate Ispat Alloys Ltd (CIAL), a subsidiary of the Abhijeet Group, but also facilitated a massive land grab. CIAL signed a memorandum of understanding with Jharkhand on March 26, 2004, for setting up a 0.75 MTPA steel plant in Latehar district with a proposed investment of Rs.1,335 crore. Munda then wrote a letter to Dasari Narayan Rao, then minister of state for coal, on August 20, 2004, recommending that the Chittarpur coal block in North Karanpura be allotted to CIAL. This block has a whopping 212 million tonne reserves of coal,” the report says.
“Three years after getting the coal block, CIAL signed a new memorandum of understanding on August 14, 2008, with Jharkhand under which it proposed to change the site of the project and triple its size to 2.5 MTPA from 0.75 MTPA,” it further notes.
In an interesting story ‘The Economic Times’ has traced the history of coal mining in India, from medieval times and how Dwarkanath Tagore, the grandfather of Nobel laureate Rabindranath Tagore played a key role in the establishment of the coal mining industry in India.
“It was an American who first tried to develop systematic coal mining in India. Suetonius Grant Heatly was born in Newport, Rhode Island, but during the American Revolution his family was loyal to the British, and fled to Britain. Heatly joined the East India Company in 1766, possibly because Lord Cornwallis, the Governor-General of India, had earlier headed the losing British forces in America, and was expected to favour the British loyalists of that conflict. Heatly became Collector of Chotanagpur and Palamu (now part of Jharkhand). And it was while travelling here that he noticed local tribal people burning coal fires, (D.P.) Jha (of the Indian School of Mines in Dhanbad) notes that the seams are found exposed on the surface in these areas. This was not far from the Damodar river and Grant, along with another East Indian man, John Sumner, realised that coal could be mined and floated down the river to Calcutta,” the report says.
“In 1778, the Company’s storekeeper in Calcutta did a test between imported English coal and Indian coal, and found “that with one maund of the British, the same work may be performed that can be done with two maunds of the country,” effectively dooming Grant and Sumner’s venture. For 40 years nothing further happened. But by 1814, demand in Calcutta had increased to the point where the economics of mining Indian coal made sense again. The Company sponsored William Jones to try mining in Burdwan, for which he took a lease of 99 bighas of land from the Rani of Burdwan. The place was called Raniganj after her, and Jones ran it, but at a consistent loss, till 1821 when the Calcutta firm of Alexander & Co, which had secured his loans, took possession and started running the mines themselves. They did better, raising production from 4,000 maunds to 2,07,000 by 1827 and making the mines their best assets, with an annual profit of 70,000. But the company failed in 1832 and this is when the mines came into the hands of Carr, Tagore, the company started by Dwarkanath Tagore, who had been born the son of a police official, but became one of the first great Indian entrepreneurs. “The purchase of Raniganj was the most important single transaction of Dwarkanath’s business career,” writes Blair B King in his biography Partner in Empire: Dwarkanath Tagore and the Age of Enterprise in Eastern India. King writes that the firm had managerial and technical expertise, plenty of capital and the vital ability to handle both Calcutta officials and local powers,” the report further notes.
Even as the inter-ministerial group (IMG) looking into the allocations of coal blocks, gets set to meet again on Monday, the Business Standard newspaper has said that the panel has decided against cancelling three blocks, given to Nagpur-based Shree Veerangana Steels.
“This is despite the company facing the government’s ire for having allegedly sold its blocks by selling ownership of the firm, in violation of the norms. The inter-ministerial group (IMG) had in its review meeting on Wednesday recommended deducting the company’s bank guarantee but said the block should not be cancelled, due to the progress made by Veerangana in developing the reserves,” the report said.
“Deciding that the issue of ownership change was beyond its remit, the IMG said its recommendation of bank guarantee deduction was without prejudice to any other action that might be warranted on account of change of name and shareholding of Veerangana,” the report further said, citing official sources.
In another report, Business Standard has said that Hindalco Industries has rubbished the charge that it profiteered from the allotment of captive coal blocks.
“According to the (Orissa) state mining department, the company has so far excavated about 16 million tonnes from this one, at Talabira in this district. If the calculation of operating margin at Rs 295.41 per tonne of coal indicated in the report of the country’s Comptroller and Auditor General (CAG) is taken as reference, Hindalco made a financial gain of Rs 466 crore,” the report notes.
“We had started mining at Talabira in 2003 and the residual deposits will cater to our need for the next three to four years only,” it cites Subir Mukhopadhyay, head, human resources, and spokesperson of Hindalco’ s Hirakud aluminium smelter unit, as saying.
16 September, 2012
Days after The Washington Post commented, with specific references to the coal allocation fiasco, on how Prime Minister Manmohan Singh had become “a tragic figure,” The New York Times asks if India “will ever be able to tackle corruption.”
“The architect of India’s economic reforms, Singh was a major force behind his country’s rapprochement with the United States and is a respected figure on the world stage. President Obama’s aides used to boast of his tremendous rapport and friendship with Singh. But the image of the scrupulously honorable, humble and intellectual technocrat has slowly given way to a completely different one: a dithering, ineffectual bureaucrat presiding over a deeply corrupt government. Every day for the past two weeks, India’s Parliament has been adjourned as the opposition bays for Singh’s resignation over allegations of waste and corruption in the allocation of coal mining concessions,” The Washington Post had noted in a 5 September piece. “The irony is that Singh’s greatest selling points — his incorruptibility and economic experience — are the mirror image of his government’s greatest failings.”
“Even as the scandal has renewed public anger about rising official graft and the state of the economy, Coalgate has provided fresh ammunition for those who say India’s politicians have become so venal and feckless that they are no longer able or willing to address the country’s entrenched problems,” The New York Times notes in its 15 September piece. “This sort of political dysfunction is hardly new in India and, in recent years, the economy was booming even as the politicians dithered. But now that the economy is slowing sharply, particularly in the ailing energy sector, analysts say India can no longer afford a government that so flagrantly fails to deliver what it promises.”
“A recent study of contributions to India’s political parties offered a telling insight into the nexus between politics and money. Companies in technology and other service businesses — industries that require few government licenses or permissions — contributed almost nothing. The biggest donors were involved in mining, power and other sectors dependent on the government to obtain rights to natural resources,” the piece further notes.
After recommending the cancellation of seven coal blocks, the inter-ministerial group looking into the issue, could decide the fate of at least six more, a Press Trust of India (PTI) report, published by DNA newspaper said, citing an official. The report however did not mention the specific blocks that would come up for review.
Another PTI report, published by The Economic Times newspaper said that the Central Bureau of Investigation (CBI) is likely to begin questioning the directors of companies alleged to have profited from the coal block allocations, in the coming week.
“In the first batch, the agency is likely to call the accused persons named in its FIR against JLD Yavatmal Energy Limited, JAS Infrastructure and AMR Iron and Steel,” the report said.
Meanwhile, opposition parties have slammed home minister Sushil Kumar Shinde for his remarks that the coal issue will soon fade away from public memory like Bofors.
“In 1984 post-Indira Gandhi’s death, when elections happened, Congress had won more than 400 seats. After five years post Bofors scandal, Congress was out of power and its seats got halved. It’s a different matter whether people have forgotten Bofors or not but Congress has forgotten what Bofors had done to it. Since then, Congress has not got majority on its own,” a PTI report, published in DNA, cited BJP leader Balbir Punj as saying.
“He has come to Delhi very recently. His importance is due to Congress party. Better he confines himself to speaking about Home Ministry. He should speak less on political issues,” the report cited JD(U) Yadav as saying.
15 September, 2012
A meeting of the inter-ministerial group (IMG) on Saturday reviewed the allocation of four coal blocks, recommending the deallocation of two blocks and encashing bank guarantees in two cases, according to an official.
The official said the group has recommended that the New Patrapada block in Orissa of Bhushan Steel and Strips Ltd and one block given to SKS Ispat and Power Ltd be deallocated.
The IMG also recommended the forfeiture of the bank guarantee of the Bihajan and Radhikapur East blocks, allocated to Bhushan Power and Steel Ltd and Tata Sponge Iron Ltd, respectively, according to officials familiar with the matter.
Meanwhile, power minister M. Veerappa Moily said the deallocated coal blocks should be given to power projects “ to meet the capacity addition target of 85,000 MW in the 12th Five-Year Plan”, according to a PTI report published by the Business Standard newspaper.
“We are always placing our priority because you know coal (which) is provided... That will contribute more to the power sector. That kind of capacity building (85,000 MW in 12th Plan) is in the offing,” the report cited him as saying.
“We can definitely produce 25,000MW by the end of this financial year provided that other things are tied up because the capacity has been created. There are also capacities which have not been utilized... It is available around you; only thing is that a decision has to be taken,” the report further cited Moily as saying.
Interestingly, a report in the DNA newspaper has said that private companies might have walked away with the best coal blocks that were profitable, as compared to those allotted to Coal India Ltd (CIL), that were loss making.
“Not only were the coal blocks allocated to CIL “loss making”, they were also “unexplored”, which means that the mines did not even have proven reserves. So, while the coal ministry, working under the Prime Minister’s Office (PMO) for several years, gave away coal mines estimated by the CAG to be around Rs.1.86 trillion to private players, the ones that were given to CIL could be virtually worthless, the report said.
“In 2008, CIL had asked for 138 mines from the government to fulfil the national coal requirement. However, their request was kept pending while private players were getting their lucrative share on an ad hoc basis. Suddenly, in May this year, the Coal Ministry, probably worried about the CAG’s on-going audit, cleared 116 coal blocks for CIL. A cursory glance at the allocations reveals that 81 of the 116 coal blocks, that is nearly 70%, are underground blocks, which are prohibitively expensive to mine. To add to CIL’s woes, 98 of them are “unexplored”. That means, no one knows how much coal there is in these blocks and some of them could be useless,” the report goes on to say.
“Compare this with what the private sector companies, currently facing a CBI probe, got from the UPA government. Documents show that 144 out of the 165 coal blocks given to the private sector since 2004 are all “explored” mines, with proven coal reserves. So, while the best and the most lucrative ones were given away by the UPA government under Manmohan Singh, the duds were given to CIL,” the report further says.
14 September, 2012
The government panel looking into the issue of coal block allocations could recommend the cancellation of one more block- Gourangdih ABC- Mint reported late Friday evening, citing an official.
The inter-ministerial group (IMG) on Friday reviewed the performance of seven coal blocks and recommended cancellation of at least one allotment, said officials familiar with the development.
“Seven blocks were reviewed and among them we have recommended Gourangdih ABC for deallocation,” an official said. The official said the block belongs to JSW Steel Ltd and Himachal EMTA Power Ltd. They could not immediately be reached for comment.
The group will now meet on Saturday when it will review another three-four blocks.
Meanwhile, union minister Pawan Kumar Bansal has ruled out scrapping of all the 58 blocks facing de-allocation.
“If there are allotments done in violation of the norms, or someone has misrepresented the facts about profile of the companies, stern action will be taken,” an Indian Express report cited him as saying.
In what could compound the government’s problems in the coal allocation issue, the Supreme Court on Friday asked the coal ministry to explain how the allocations were made.
The coal ministry is expected to give its explanation on whether there were irregularities in the allocations within eight weeks, a report in Mint said.
“Meanwhile, PTI reported more coal block allotments will be cancelled, following the ones scrapped on Thursday, citing coal minister Sriprakash Jaiswal. The inter-ministerial group (IMG), which is in the process of reviewing the allocations, is meeting on Friday afternoon. The ministry has cancelled the allotment of coal blocks to four companies and decided to encash the bank guarantee of one of them,” the report further said.
The DNA newspaper reported Friday how a “wilful neglect” of Coal India Ltd (CIL) “has continued even as the Union government contends that coal block allocation to private players is essential to meet the country’s power requirements.”
The report says that as many as nine important posts in the government-owned company are either held by officials on an extension or on dual charge or are lying vacant.
“The government has in the past stated repeatedly that CIL is unable to meet these requirements. These nine posts in CIL and its subsidiaries include roles key to planning, strategy and ensuring the competitiveness of the Navratna company. While some are held by officers on extension and therefore unwilling to take sensitive decisions towards the end of their careers, some officers find themselves overburdened with dual charge,” the report noted.
Even as the IMG looking into the issue of coal block allocations meets again on Friday, an NDTV report says that one company Castron Mining, that was stripped of a block allotted to it, “appears close to BJP.”
At least 10 more blocks are expected to be on the IMG’s review on Friday.
“In 1999 when the BJP-led NDA was in power, Castron Mining was given one coal block in Jharkhand. In India, private firms cannot operate coal mines for commercial use -the coal blocks they get have to feed power, steel or cement plants. Castron was meant to use its coal block in Jharkhand for an iron and steel project. Because it has yet to begin mining, its coal licence is being cancelled. Castron’s office at Nariman Point in Mumbai is shared by businessman Anup Agarwalla’s BLA Group , which has interests in the power sector. Both companies list the same address on their websites. Mr Agrawalla’s firm was allotted two coal blocks in Madhya Pradesh in 1996. Mr Agarwalla is listed as the co-convener of the BJP’s Commerce Cell on the party’s website. In 2009, he was the BJP’s candidate for the Rajya Sabha election from Ranchi, but lost,” the report notes.
At least 10 more blocks are expected to be on the IMG’s review on Friday, another NDTV report said.
Amid a raging controversy over the allocation of coal blocks, the power ministry has said that it will ask the coal ministry to de-allocate the captive coal blocks from projects that have not progressed to those that will be commissioned during the 12th five-year plan period, The Hindu Business Line newspaper said on Friday.
The power ministry is working out the number of such projects where this block rejig can be done, the report said.
“Explaining the need to take such a step, (power minister M. Veerappa) Moily said that coal will have to be lined up for meeting the ambitious target of 12th Plan and the desired GDP (gross domestic product) growth,” the report further said.
“We have added around 54,000MW in the previous Plan. To keep up the tempo, we have to see which projects need to be synchronized by end of the 12th Plan. And I am also sub-dividing it into projects which are coming up by 2013. To that extent, we may de-allocate and also re-allocate depending on priority of synchronization,” the report cited Moily as saying.
Meanwhile, citing officials of the Central Bureau of Investigation (CBI), a report by the Press Trust of India (PTI) has said that the coal ministry “knew that AMR Iron and Steel Ltd, accused by CBI in its FIR, was in possession of coal blocks when it applied for them in 2008.”
“CBI sources said they had found that the company representatives met the then minister of state for coal in his ‘chamber’ on 18 September 2008 wherein they claimed that they were not part of the Jayaswal group, but the equity was held by Lokmat group, Abhijeet Infrastructure and IL&FS,” the report, published by Zee News channel has said.
Another report in The Economic Times newspaper, too, said that the CBI has accused coal ministry officials of “conniving with private miners.”
“The CBI, which began investigating the case in June this year and filed the first set of first information reports against five firms on 4 September, said ‘unknown officials’ in the coal ministry allocated mines to companies even though they knew beforehand that these entities were ineligible. The charges of cheating and abuse of official position are similar to what it had accused officials of in the 2G scam case,” the report said.
“In one instance, the CBI says that the coal ministry allocated a mine to AMR Iron and Steel even after the company admitted to concealing information. The FIR said representatives of AMR, controlled by Nagpur-based businessman Manoj Jayaswal and a key figure in several of the firms named in the FIRs, had disclosed to the then minister of state for coal, Santosh Bagrodia, during a meeting in his chamber on 18 September 2008 that it had concealed information about its ownership and the fact it had been awarded blocks before in its application for a fresh block. But the coal ministry nevertheless went ahead and allocated the Bander coal block in Maharashtra to the company on 29 May 2009,” the report further added.
The principal opposition Bharatiya Janata Party (BJP) said Thursday that it would “launch a nationwide agitation from 17 September demanding Prime Minister Manmohan Singh’s resignation on the coal allocation issue and cancellation of the blocks besides an impartial probe by a Supreme Court-monitored SIT,” a PTI report said.
“From September 17 to 24, we will hold the campaign across the country demanding the Prime Minister’s resignation. Manmohan Singh is the first and the main accused in the coal scam. He should resign,” the report cited BJP general secretary Ananth Kumar as saying.
In an interesting news report, Business Standard said that an empowered group of ministers “overruled” bureaucrats who were “uneasy” about Reliance Power Ltd being allowed to divert excess coal from the mines allotted originally for feeding the ultra mega power project (UMPP) at Sasan in Madhya Pradesh. The panel chose to go by the attorney general’s opinion that had favored the move, the newspaper said.
“While expressing his disapproval against any move to allow diversion of coal to Chitrangi Power Pvt. Ltd, another power project being set up by R-Power, near the Sasan UMPP, Perti had argued the allotment letter for captive coal blocks linked to Sasan did not specify any provision allowing this,” the report added.
“Business Standard reviewed the allocation letter for Sasan. Clause 12 of the letter, in fact, states that no coal should be sold, delivered, transferred or disposed of, except for the stated captive mining purposes, except with the previous approval of the central government on a case-to-case basis. The allocation letter also states, under clause 6, that surplus coal, if any, could be handed over to the nearest Coal India subsidiary, at a transfer price to be determined by the government. The company had bagged the 3,960-MW Sasan UMPP through rate-based competitive bidding in 2007. It was allotted three captive blocks—Moher, Moher-Almohri Extn and Chhatrasal—to meet the requirement of 16 million tonnes per annum (mtpa). Taken together, the three blocks have an annual production potential of about 25 mtpa,” the report further said.
13 September, 2012
Business Standard newspaper carried an interesting piece that details how the discretionary allocation of coal blocks is “not the exclusive preserve of the United Progressive Alliance.”
Citing the 27 August speech by Prime Minister Manmohan Singh on the issue, the report notes that “every government since then (since 14 July, 1994, when the then Congress government set up a screening committee under the coal secretary), including the Congress, Janata Dal and the Bharatiya Janata Party-led National Democratic Alliance (NDA), has allocated coal blocks to private companies and the number rises progressively as economic growth picks up.”
“In fact, as the CAG report points out, the NDA tried to go a step further. On April 24, 2000, it introduced the Coal Mines (Nationalisation) Amendment Bill, 2000, in the Rajya Sabha seeking coal block allocation to Indian companies for commercial mining. Trade unions at the time strongly opposed the Bill. They were concerned at the possibility of unscientific mining and labour exploitation (the reason coal mining was nationalised in the first place). Interestingly, the Bill is pending in the upper House. So, discretionary allocation to private companies, based on the recommendations of an inter-ministerial screening committee, had been standard operating procedure for all governments since at least 1993. The point to note, however, is that previous CAG audits did not raise the question of notional losses as a result of such allocations. A senior CAG official admits that this is the first report of its kind on coal, though the practice of projecting notional losses or gains has been followed for years in other sector,” the report says.
Another report in The Economic Times newspaper sought to detail how some companies like Jas Infrastructure, Vini Steel & Power, Navbharat Coalfields and JLD Yavatmal got coal mines simply “because the rules were subjective and because the gatekeepers could be influenced.”
“The rules basically said companies needed to show downstream uses of coal — new power, steel or cement capacity — and financial capabilities to execute the project. A ‘screening committee’, chaired by the coal secretary, and with representatives from the ministries concerned and the state government in which the block was located, would decide. Several small companies with zero or minor downstream interests bagged a block exploiting the loopholes at key stages of this process, and made a windfall for themselves,” the report noted.
The inter ministerial group looking into the issue of coal block allocations is likely to review blocks alloted to Tata Steel and Reliance Power, Firstpost.com said on Thursday.
“The IMG may finalise recommendations on 10 blocks of coal on Friday,” the report said.
“A discussion of the Nerad Malegaon & new Patrapara coal blocks is also likely to be held along with a discussion on Kotre Basantpur & Panchmo block,” the report added.
Union coal minister Shriprakash Jaiswal has admitted that he was approached by the Nagpur-based Jayaswal brothers whose names figure in the first information reports filed by the Central Bureau of Investigation, as the “final arbitrator” in 2008 in a dispute between themselves.
Speaking to Times Now channel, Jaiswal however said that even though he was approached, he did not arbitrate the dispute.
Defending Prime Minister Manmohan Singh, he said that the latter had formulated a policy that was “hundred per cent correct” as there was no other way of solving the problem of coal availability in the country.
“While Castron Mining Ltd and Domco Smokeless Fuels Pvt Ltd have one block each, Field Mining and Ispat Ltd owns two blocks,” the report said.
“The IMG has also recommended that the bank guarantee of three others private companies be encashed as they had failed to develop the mines even though several years had passed since they had been allotted. A report has been sent to the Coal Ministry for action on eight coal blocks, which include the four where de-allocation has been recommended. One company has been directed to submit the bank guarantee, while the IMG has also recommended that the bank guarantee of three others be encashed,” the report said.
The inter-ministerial group looking into the issue of coal block allocations has recommended action against eight companies that were allocated coal blocks, NDTV news channel said on Thursday.
“The committee has asked that four companies lose their coal permits, while it wants another three firms should to cede a portion of the bank guarantees they furnished when getting coal blocks. One other firm has been short-listed for failing to provide a bank guarantee at all,” the NDTV report said.
The report, however, did not name specific companies or blocks.
Another report in DNA newspaper, too, said that the panel “has recommended de-allocation of four mines allotted to private firms and encashment of bank guarantee of three others on the ground of non-development of mines within a prescribed time”.
“The IMG, which reviewed eight cases yesterday has recommended de-allocation of four coal blocks including two allotted to private firm Field Mining and Ispat,” the report cited coal ministry official as saying.
“Field Mining and Ispat was slapped a show cause along with 58 others for delay in development of Chinora and Warora Southern Part coal blocks in Maharashtra. This is the first recommendation by the IMG ever since controversy broke out over the allocation of coal blocks after the recent CAG report that criticised the government for allotting them in a non-transparency,” the report noted.
V. Narayanasamy, junior minister in the Prime Minister’s Office again sought to defend Prime Minister Manmohan Singh on the coal block allocation issue on Thursday. At a press conference in Bhubaneshwar, he said that the “CAG (Comptroller and Auditor General) report compares mining price of Coal India Litd (CIL) and private companies—that is supposed to be presumptive loss.”
NDTV news channel cited him as saying that the Prime Minister has said that “CAG’s calculations are not in accordance with existing norms” because “Coal India has blocks in prime location(s),” while “private players have blocks in the jungle, infrastructure has to be developed by them.”
“CAG never said the allocation was a scam,” the news channel cited him as saying.
DNA newspaper reported on Thursday that the Supreme Court’s dismissal of a public interest litigation (PIL) on the coal block allotment issue had come as a “desperate relief for the ruling dispensation”.
“As it dismissed a PIL citing the CAG reports for various irregularities, a two judge bench of the Supreme Court comprising Justices RM Lodha and AR Dave said: “CAG report will be examined by the public accounts committee and then debated in Parliament. One cannot reach final conclusion on the basis of the CAG report”,” the news report said.
“That this mandatory proviso repeated ad nauseam by the party with little effect on the public discourse has been echoed by the apex court came as big relief to the beleaguered Congress that has been fighting a losing battle of perception,” the report further said.
The coal ministry is all set to counter the allegations made by the Comptroller and Auditor General (CAG) on the issue of allocation of coal blocks.
NDTV news channel said in a report on Thursday that the ministry is likely to submit its written response to a parliamentary panel on Friday.
“For example, the ministry will counter the auditor of overlooking the fact that the costs of extracting coal vary from mine to mine, and that when private firms who were given cheap coal fields made profits, the government gained through taxes,” the NDTV report said.
In a front page story on Thursday, The Indian Express newspaper said that although the Union coal ministry has maintained that it had awarded coal blocks only on the recommendations of state governments, in 2009, the screening committee had actually overruled the West Bengal government’s opposition to allot a coal block to two firms.
“The committee allotted the block to Sajjan Jindal’s JSW Steel and the Ujjal Upadhyaya-backed Himachal EMTA Power Ltd in an alleged deviation from its earlier decision to make state recommendation and signing of memorandum of understanding (MoU) between private companies and the state government mandatory for allocation of blocks. As per the minutes of the 35th meeting of the committee in New Delhi, “The representative from the government of West Bengal stated that the only block located in their state, namely Gourangdih ABC, should be allotted to West Bengal Mineral Development and Trading Corporation (WBMDTC). Since West Bengal has not forwarded the name of WBMDTC to the screening committee for allocation, the state government asked the ministry of coal not to allocate the coal block to anyone and (it) be reserved for allocation to WBMDTC under government company dispensation,” the report said.
“Sources also said that JSW Steel had got one more coal block during 2006-09. Under a joint venture, EMTA, formerly known as Eastern Mineral Trading Agency, and JSW Steel are developing a 250 MW power project in Burdwan, West Bengal,” the report further noted.
Meanwhile, citing an official, The Economic Times said Thursday that the “Central Bureau of Investigation (CBI) is scrutinizing an allotment of a large coal block to a privately-held company owned by Congress MP Naveen Jindal ahead of state-owned companies, even though the Jindal company’s claims were rejected in the early stages of the allotment process.”
“The company, Gagan Sponge Iron, was owned by Jindal and his wife when the block was allocated in September 2007. In February 2007, the West Bengal government sent a list of 20 coal blocks which the West Bengal Mining Development Corporation intended to use. These coal fields, which included the Amarkonda Murgadangal block, which is in Jharkhand, were meant to provide coal to power generation companies owned by the eastern state. The Central Electricity Authority (CEA), which pre-qualifies companies, initially did not deem Gagan Sponge Iron eligible for allotment of a captive coal mine. But, the company was later allotted the block by the screening committee in its meeting on September 13, 2007. Subsequently, in October 2007, the West Bengal government wrote to the then power minister Sushil Kumar Shinde seeking his intervention in the matter on the grounds that it was banking on the same block to meet its capacity addition programme. In the event, the block stayed with the Jindal-owned company,” the report said.
Citing a letter, The Times of India reported that the Nagpur-based Jayaswal brothers whose names figure in the first information reports filed by the CBI had nominated union coal minister Shriprakash Jaiswal “final arbitrator” in 2008 in a dispute between themselves. “The document also says Lokmat group, whose promoters figure in the CBI cases, got 26% free stake in a Jayaswal company for its ‘efforts’ to get coal blocks for them,” the report said.
“The 2008 letter written by Abhijeet group MD Manoj Jayaswal to his father Basant Lall Shaw details financial disputes between him and the rest of the family. ‘In the event permission for the relocation is not granted, BLS shall retain JLD and MXJ group shall also pay to BLS group such adequate compensation...as may be decided by Shri Shriprakashji Jaiswal of Kanpur, whose decision shall be binding and final and the parties shall not appeal against the same’,” the newspaper report further noted.
“The letter also gives important details of how the Jayaswals managed to pocket coal blocks. According to Manoj Jayaswal, it was decided by the family to give at least 26% free shares to anyone who was instrumental in getting coal blocks allotted to the family companies. As per the family settlement, ‘26% shares of AMR (which figure in the CBI FIR) are to be allotted free of cost to Lokmat group. The rights on balance 14% also needs to be decided by Shri Sriprakashji,’ Manoj Jayaswal says in the letter, which appears to reflect his faith in the Union minister,” the report said.
News channel CNN-IBN reported Wednesday evening that after Jindal Steel and Power Ltd (JSPL) another company, linked to Congress member of Parliament Naveen Jindal, that was awarded a coal block, has come under the scanner.
“In the latest case, three Jindal group companies, JSW Steel, Jindal Thermal Power and Jindal Stainless Steel formed a consortium with government-owned Mahanadi Coalfields Ltd in 2005 for a coal block in Talcher coalfields in Orissa. All three Jindal group companies were show-caused in 2010 for not carrying out any mining activity from the coal block awarded,” the news report said.
CNN-IBN said that it had found that Naveen Jindal is a director on the board of Jindal Stainless Steel.
“The coal field was awarded to the Jindal group and Mahanadi Coalfields Ltd at a time when the block was de-allocated from the original allottee, Kalinga Power. At the time of the allocation of the block to the Jindal group, Kalinga Power had gone to court against its own de-allocation,” the report further said.
Naveen Jindal however denied any involvement with the company, the report added. “I have nothing to do with the companies that were served the notice. They are my family companies,” it cited Jindal as saying,
Meanwhile, the coal ministry will take more time for deciding on the cancellation of allocated blocks, Business Standard said in a report. “The government’s high-level inter-ministerial Group (IMG) on review of captive coal block development met on Wednesday, amid unconfirmed reports that the finance ministry had raised doubts over the panel’s authority to recommend cancellation of allocations. The coal ministry said more sittings would be required for a final decision on the controversial matter. Industry sources indicated the IMG on Wednesday decided to recommend cancellation of allocation for at least five blocks, without naming the blocks or the companies concerned. A member of the IMG refused to confirm the information, saying discussions on the matter are still on,” the report noted.
12 September, 2012
A report published late Wednesday night by the Hindustan Times newspaper said that the meeting of the inter-ministerial group (IMG) on coal allocations remained inconclusive “amid strong views that the panel lacked the mandate as well as the ability to carry out such an exercise”.
“The IMG noted that there is no mechanism to verify the data furnished by the allottees,” the report said, citing minutes of the earlier meetings of the IMG.
“The minutes, reviewed by HT, categorically stated that even the ministries of steel and the department of industrial policy and promotion do not have agencies to monitor the progress of end-use plants,” the report said.
“The finance ministry has picked several holes in a proposed plan involving de-allocation of coal blocks following a raging controversy on their awards to power and steel companies,” the report further said.
“The finance ministry has told the coal ministry that it cannot firm up its views in such a rushed manner,” the newspaper quoted an official as saying.
CNN-IBN news channel said late Wednesday evening that the government had rejected a news report that there were differences between the finance and coal ministries on the process, involving the IMG that was being followed. CNN-IBN reported that a finance ministry statement said that a letter written by a joint secretary in the finance ministry, “was only a routine administrative matter.”
“The letter had asked the Chairman of the IMG that all the documents and facts relating to each case be provided to all the members of IMG without which IMG will not be in a position to take any view or make any recommendation,” the CNN-IBN report said.
The Press Trust of India reported on Wednesday that the Income Tax (I-T) department and the Enforcement Directorate (ED) have begun investigating companies that have been accused of having profited from coal block allocations.
The PTI report, published by Business Standard newspaper, said that “both the agencies, under the finance ministry, have begun a discreet inquiry into the firms, especially those who have been recently booked by the CBI (Central Bureau of Investigation) in its latest FIR (first information report).”
“Sources monitoring the probes said while the agencies are yet to be officially handed over the CBI complaint, they have begun a preliminary exercise to obtain data about the “financial activities” of these firms,” the report further said.
“While the CBI has has named five companies—JLD Yavatmal Energy Limited, JAS Infrastructure Capital Private Limited, AMR Iron and Steel, Navbharat Power Private Limited and Vini Iron and Steel Udyog Limited--with their 20 directors and unknown government officials, it may register more cases against few other firms who were allocated blocks. Both I-T and the ED, according to sources, have information about the finances of few companies who were allocated coal blocks as the agencies had probed separate cases in this regard last year,” the report added.
The Hindu newspaper said Wednesday evening that up to 18 companies could face action in the coal allocation issue.
“Apart from facing de-allocation of coal mines in view of poor progress of work in the coal blocks allocated to them, defaulting companies will also be faced with a loss of their bank guarantees (BG) furnished by them at the time of allocation. The IMG has short listed around 18 coal mining companies for action under the guidelines for bank guarantee deduction,” the report said.
“The Inter-Ministerial Group (IMG) headed by Zohra Chatterjee have given a final shape to the Bank Guarantees guidelines which will now result in performance linked encashment of BGs furnished by these companies. The deduction of the bank guarantee will be on the basis of milestones achieved on ground and the rating given by the IMG for various works. The IMG has worked out a 100 mark index under which companies would be given marks for various milestones achieved like submission of mining plan and approval of mining plan which will carry the highest 10 marks each, application for forest clearance and land acquisition will carry 8 marks each and similarly other criteria like grant of forest clearance, obtaining of mining lease and so on,” the report further added.
“The delay in developing of particular block could result in a deduction of bank guarantee to the tune of 50 per cent and if no work has been done then it could be both cancellation of the block and deduction of bank guarantee,” the report said.
In a report on Wednesday, The Hindu newspaper has said that the Central Bureau of Investigation (CBI) is unlikely to initiate any probe against Ajay Sancheti, “a close aide” of Bharatiya Janata Party chief Nitin Gadkari,” whose company allegedly got coal blocks in Chhattisgarh by entering into a joint venture with a State-owned firm.”
The newspaper report said that the CBI could not move against Sancheti’s company SMS Infrastructure Ltd. as it was not directly allotted the blocks by the union coal ministry. “Mr. Sancheti’s firm later entered into a joint venture with the Chhattisgarh Mineral Development Corporation for exploring these blocks. Unless the Chhattisgarh government or the state high court orders an investigation, we cannot initiate a probe,” the report cited the senior CBI official as saying.
“So far, the investigation was revolving around five firms. We are now planning to probe at least 10 more firms. We are evaluating all these documents and evidences. From next week onwards, we will start calling those named in the FIRs, and also government officials under whose tenure these blocks were allotted,” the report further cited the official as saying.
Lawyer and activist Prashant Bhushan said Wednesday that he could move the Supreme Court by next week, demanding cancellation of coal blocks.
A Press Trust of India (PTI) report said that Bhushan is collecting documents regarding the coal block allocation, which the Comptroller and Auditor General ( CAG) has found fault with, and preparing a detailed complaint.
“Sometime next week, I will be filing it in the Supreme Court. Like in the 2G case, I will be demanding cancellation of the allocation and an independent probe by a Special Investigation Team,” he told PTI.
Meanwhile, senior leaders of the principal opposition Bharatiya Janata Party (BJP) met President Pranab Mukherjee on Wednesday and “and sought his intervention to stop attacks on constitutional bodies,” the news channel CNN-IBN said in a news report.
“Senior BJP leaders LK Advani, Sushma Swaraj, Arun Jaitley and Murli Manohar Joshi met the President in the hope of putting more pressure on the UPA government over the coal block allocation controversy,” the report said.
BJP member of Parliament, Hansraj Ahir, who had first written to the Prime Minister about fraudulent coal block allocations, has said that monetary gains made by Nagpur based businessmen, from coal have been routed to Mauritius. “”They include some from Nagpur with one of them having opened an account in the name of his daughter,” a PTI report cited Ahir as saying on Tuesday.
Although names of three businessmen with links to Nagpur—Manoj Jayaswal and brothers Vijay and Rajendra Darda—have prominently figured in the coal block allocation controversy, a report in the DNA newspaper has said that several lesser known businessmen from the city could be involved in the alleged scam.
“A DNA investigation has thrown up a clutch of names of prominent local industrialists—such as Mohan Agarwal, Govind Daga, Ashok Daga, Nandkishore Sarda and Mukesh Gupta—some of whom have traded in coal blocks that were allotted free and made hundreds of crores and splurged on luxuries,” the newspaper report said.
“Plan power and steel projects, get coal blocks allocated for free, sell the coal blocks at huge profit, junk the projects and live the good life,” the newspaper said while detailing what is said was the modus operandi adopted by businessmen from the city.
Citing an unnamed coal ministry official, DNA newspaper said Wednesday that the ministry is “ preparing a policy to ensure that any surplus coal from the allocated blocks will go to Coal India Ltd either at a notified price or at the cost of production.”
“ While this will be implemented with prospective effect, it will prevent power companies that had got these coal blocks, from making profits by selling surplus coal,” the news report said. “ The coal ministry, which was in the process of making the policy has decided to go against the advice of an empowered group of ministers (EGoM) as well as the attorney general that had allowed Reliance Power to use surplus coal generated from the mines allocated for its 4,000MW Sasan UMPP (ultra mega power project) at its Chitrangi plant.”
“The coal ministry, which was in the process of making the policy has decided to go against the advice of an empowered group of ministers as well as the attorney general that had allowed Reliance Power to use surplus coal generated from the mines allocated for its 4,000 MW Sasan UMPP at its Chitrangi plant,” the report said, citing the ministry official.
The Indian Express reported Wednesday that Jindal Photo Ltd, a company promoted by the BC Jindal Group, was under the scanner of the Central Bureau of Investigation (CBI). The company was allocated the Mandakini (Talcher) coal block in Orissa in January 2008.
“The development of the power project is understood to be in the initial stages. As per the documents available with The Indian Express, Jindal Photo submitted five applications in January 2007 to the ministry of coal, which was taken up by the screening committee. The firm sought coal blocks at Talcher, Ib river in Orissa, Mand Raigarh in Chhattisgarh, and Raniganj in West Bengal for supply to their power projects. They were allotted a coal block with Tata Power Co. Ltd and Monet Ispat at Talcher,” the newspaper said.
The Economic Times said that those companies that have not developed coal blocks allotted to them, could face a penalty of up to one year royalty that the government lost on account of the delay.
In another report, The Economic Times said that the government is moving to regulate the power tariff charged by companies owning captive coal blocks.
“A letter sent last week by the coal secretary to his counterpart in the power ministry also has the consumer at the centre of planned changes to policy. “A comprehensive regulatory and monitoring mechanism is required to be formulated to ensure that the benefit of cheaper coal is passed on to the consumer,” the 4 September letter sent by coal secretary S.K. Srivastava notes,” the report said.
The Financial Express newspaper said Wednesday that an internal finance ministry note had “warned that 10 corporate entities, projected to generate 70% of all power in next five years, will become more vulnerable if coal blocks allotted to them are cancelled en masse.”
“What has got the government particularly worried is the impact a possible deterioration in the financials of these firms, in the event of the licences being cancelled, would have on the country’s banks. Among the banks that have fairly a large exposure to these business houses are State Bank of India (SBI), ICICI Bank Ltd and Punjab National Bank and the ministry is concerned about the stress any defaults would put on banks,” the report further said.
On 7 September, Mint had reported that the government is worried that loans given by banks to companies being investigated over irregularities in the allotment of coal mines may turn bad, and has asked them to collate information on such debt.
In another report, The Financial Express said that the CBI could probe the power ministry’s role in coal block allocations. “The power ministry’s role in the allocation of coal blocks to 146 firms between 2006 and 2009 has come under the CBI scanner. Among the private firms the ministry recommended for coal blocks, some were ineligible for allocation,” the report said, citing unnamed officials.
The Business Standard newspaper reported on Wednesday that the in the wake of the coal block allocation row, the government is mulling clauses to mandate participation of companies in tariff based bidding for power.
“The brouhaha over coal block allocations has goaded the government into correcting the policy imperfections that have long prevailed in India’s coal mining sector. It is planning a clause to make it mandatory for captive miners to take part in tariff-based bidding for power,” the report said. “A few miners have been selling power produced through coal from their captive mines in the open market to make profits. The coal ministry now plans to add the mandatory clause in captive miners’ allotment letters.”
The report further said that “a case in point was Jindal Power Ltd (JPL), an arm of Congress MP Naveen Jindal-promoted Jindal Steel and Power Ltd (JSPL). JPL has been operating a 1,000-MW coal-fired plant at Chhattisgarh’s Raigarh since 2008. The plant uses coal from two captive mines—Gare Palma IV/2 and Gare Palma IV/3—located 7km away.”
“JPL sold power at the highest price of Rs.4.30 a unit in 2010-11 and Rs.3.85 a unit in 2011-12. “The average rate per unit has fallen over the years and works out to Rs.3.40 a unit now, compared to Rs.3.85 last year,” said a company spokesperson. The firm’s coal cost comes to Rs.650 a tonne, including Rs.147 royalty, against the cost of Rs.700 a tonne when buying coal from Coal India. He added the company had no choice but to sell power in the open market, as it did not get any long-term PPA (power purchase agreement),” it said.
In another report Business Standard said that the inter-ministerial group looking into the coal block allocations, was likely to miss its 15 September deadline for a final call on the de-allocation of the blocks as it is “yet to get the review reports on each allocattee from the Coal Controller Organisation (CCO).”
In an interesting story, NDTV news channel said that the Central Bureau of Investigation was examining whether former bureaucrats who joined companies after retirement helped those companies get coal blocks.
“What is clear already is that several senior bureaucrats who could have helped inference the allocation process were employed by private companies after leaving the government,” the report said.
“R.V. Shahi was India’s longest serving power secretary—he held the position between 2002 and 2007. During this time, Jindal Steel and Power Ltd, owned by Congress MP Navin Jindal, was allocated two coal blocks. Mr Shahi is now an independent director of the same company, whose businesses include steel, power and mining,” the report said. “Like other companies, Jindal Steel and Power was chosen by a screening committee that included representatives of different ministries and stakeholders. Mr Shahi says that the coal blocks given to Mr Jindal’s firm were for sponge iron plants and not for power, therefore, he says, officials from his ministry would not have played a role in the selection process. But during Mr Shahi’s tenure as power secretary, two other Jindal Group companies were assigned coal blocks for power plants. These companies are headed by Navin Jindal’s brothers and he is a director in one of them. “
“In Jharkhand, P.P. Sharma was the chief secretary between December 2004 to January 2006, and then again from August 2007 to March 2008. Now, he is a full-time director with the Abhijeet Group, which has power and mining projects spread across Jharkhand, Maharashtra, Bihar and West Bengal. During Mr Sharma’s tenure as chief secretary, the same Abhijeet Group got five coal blocks. Though the allocations are done by the Coal Ministry, the state government’s views are critical in the selection process and senior officials from the state where the coal field is located are on the screening committee that decides on applications,” the report further said.
“Mr N.C. Jha is the CEO of the mining business of Monnet Energy and Ispat Ltd—the second largest coal-based sponge-iron manufacturer in India. Mr. Jha was the technical director of government-owned Coal India from 2007 and chairman of Coal India in 2011. The technical director of Coal India is a member of the screening committee. Between 2008 and 2010, the group was allocated three coal blocks for power and sponge iron by the coal ministry,” the report noted.
Meanwhile, Hindustan Times newspaper said that the government allegedly “skirted rules” for some companies while allocating coal blocks. “The government allegedly skirted the screening process to allot two coal blocks to Jindal Steel and Power and Strategic Energy Technology Systems Pvt. Ltd, a joint venture between a consortium of Tata companies and South Africa-based Sasol Synfuels International, in February 2009 for coal to liquid projects,” the newspaper said. “he allocations have grown into a major controversy, as BJP MP Hansraj Ahir wrote to Prime Minister Manmohan Singh on Monday, alleging that these allocations were made through an inter-ministerial group (IMG), and not the screening committee. Public sector undertakings Steel Authority of India Ltd, GAIL India Ltd, IRCON and Indian Oil Corp. Ltd also applied but were refused,” the report added.
“The coal controller report accessed by CNN-IBN covers as many as 18 companies and will give its final recommendations to the coal minister by 15 September. In its report, the CCO (Coal Controller Office) has also recommended extension of deadline for many companies as clearances are delayed, while 18 coal block firms are likely to lose their bank guarantees.The coal controller report recommends the IMG to deallocate coal blocks to Jindal Steel and Bhushan Steel,” the report said.
SKS Ispat, with links to Union minister Subodh Kant Sahai, invested only Rs.55 crore against a project cost of Rs.500 crore. According to the coal controller report, there is no office or other infrastructure.
According to the report, Jayaswal Neco, owned by Manoj Jayaswal, which was raided by the Central Bureau of Investigation last week, has invested only Rs.34 crore against a project cost of Rs.130 crore.
Naveen Jindal’s cousin Sajjan Jindal’s company JSW has invested only Rs.60 crore against a total project cost of Rs.396 crore. The report also says the Odisha project has not started production. The recommendation is to deduct bank guarantee of Rs.56 crore.
The coal controller’s recommendations will be taken into account by the inter-ministerial panel along with the responses by the companies. The panel is set to meet on Wednesday and is likely to submit its report to the Prime Minister’s Office by 15 September.
Interestingly, Mint reported that JSPL, a part of the $12 billion OP Jindal Group, had cornered 6% of coal reserves doled out.
“Between 1996 and 2009, JSPL and its unit Jindal Power Ltd were allotted nine coal fields in the mineral-rich states of Orissa, Chhattisgarh, Madhya Pradesh and Jharkhand, translating into reserves of 2.59 billion tonnes, or 5.97% of the 43.35 billion tonnes doled out by the Centre. Since 1993, 195 coal leases were handed to 289 companies (several in consortium),” the report said.
“The coal blocks allocated to JSPL on its own and as part of a partnership were Gare Palma IV/1 (1996), Gare Palma IV/2 (1998), Gare Palma IV/3 (1998), Gare Palma IV/6 (2006) in Chhattisgarh, Utkal B-I (2003), Ramchandi Promotional (2009), Urtan North (2009) in Orissa, and Jitpur (2007) and Amarkonda Murgadangal (2008) in Jharkhand,” it added.
“JSPL’s non-producing blocks Jitpur and Amarkonda Murgadangal in Jharkhand, Gare Palma IV/6 in Chhattisgarh and the coal-to-liquid block Ramchandi Promotional in Orissa have been named by the CAG,” the report further said.
Meanwhile, S. Narsingh Rao, chairman of Coal India Ltd (CIL), has said that coal benefits should be for the people. In an interview published in Mint, he said that the government “thought, keeping in mind CIL’s limitations, that it should not depend on CIL alone for mining coal and that it should allow supplementary efforts to shore up coal production”.
“That’s why coal blocks were allotted for captive purposes both to public and private sector companies. Some of the blocks were taken from CIL as well—those from which CIL didn’t propose to produce any coal until the end of the 11th Five-Year Plan (2007-12), he added.
The Samajwadi Party has said that the coal block allocation fiasco is a “bigger scam” than the 2G telecom scam.
“When the entire truth comes out, people will be surprised that it is a much bigger scam than 2G scam... The Prime Minister should take initiative in ordering a probe and cancel all coal block allocations,” the PTI news agency quoted party general secretary Ram Gopal Yadav as saying, according to a rpeort published by The Times of India.
“The SP’s stand on coal issue on the eve of its two-day national executive in Kolkata assumes significance as the party leadership is likely to spell out its strategy for the 2014 Lok Sabha election and its relationship with Congress,” the PTI report said.
11 September, 2012
Coal minister Shriprakash Jaiswal on Tuesday denied allegations by the Samajwadi Party and the Bharatiya Janata Party that some blocks had been allocated during his tenure as coal minister. Speaking at a press conference in Lucknow, Jaiswal said that no coal blocks were allocated during the UPA-2 regime. He said that since 1993, 195 blocks had been allocated and that the entire information was available in public domain.
When asked whether he was related to Manoj Jayaswal of the Abhijeet Group, he asked that when he “had not allocated any coal block as coal minister, then how does it matter?”
“If someone has any proof that I influenced allocations as minister of state of home, then he must present the proof,” he said.
“PM wanted to speed up the industrialization process of the country and hence the allocations of coal blocks,” Zee news channel quoted him as saying.
Earlier in the day, Zee News said that Samajwadi Party leader Ram Gopal Yadav on Tuesday had accused Jaiswal of serious irregularities in the allocation of coal blocks after he took charge of the coal ministry.
Speaking to Zee News, Yadav said, “Shriprakash Jaiswal cleared allocation of three coal blocks with one hour and seven minutes of taking charge as Union coal minister.” Jaiswal took charge of the ministry on 19 January 2011.
At a time when the controversy surrounding allocation of coal blocks is making headlines, Coal minister Shriprakash Jaiswal has admitted that there is no possibility of coal production going up in the near future. In an interview published in Business Today magazine, the minister further said that he did not accept the premise of the Comptroller and Auditor General (CAG) for calculating the loss figure.
“Coal India will increase production by 7 per cent this fiscal. There is no possibility of production going up substantially in the near future as the public sector company is facing many problems,” he said
“I do not accept the premise of the CAG. The comparison of mines belonging to CIL with that of the allocated (captive) coalmines is not appropriate. The geo-mining conditions of the allocated mines vary. Coal may be available at 100 feet in one mine while in another it may be 500 feet. Besides, some mines are in the interiors or tense (Naxal) areas. On the other hand, the mines that CIL operates are in easy areas,” Jaiswal told the magazine.
Meanwhile, The Times of India has made a comparative analysis of how mining corporations owned by state governments have actually fared better than Coal India Ltd in signing lucrative deals with private companies to develop coal blocks allocated to them.
“It’s strange but true. The state mining corporations (SMCs) of Maharashtra, Madhya Pradesh, Chhattisgarh, and the Tamil Nadu Electricity Board (TNEB) easily landed lucrative deals with private partners to produce coal in mines allotted by the ministry,” the report said.
“The SMCs of Maharashtra (4 blocks), MP (6), Chhattisgarh (3) and TNEB (1) auctioned their blocks even though the ministry of coal has been shouting through the rooftops that rules do not permit it. In what cannot be a mere coincidence, the model of agreement for all was the same,” the report further noted.
“Several private companies, some of which had blocks directly allotted by the ministry too, made a beeline to join hands with the state-owned companies. The SMCs and TNEB formed joint ventures (JV) with the highest bidding parties and kept 51% stake to themselves,” it said.
In a separate report, The Times of India said the “continuation of tourism minister Subodh Kant Sahai and coal minister Sriprakash Jaiswal looks uncertain, with the Congress leadership considering strong measures to contain the fallout from the (coal allocation) scam.”
The newspaper said that although the Congress leadership “continues to resist the allegation of a scam” the party thinks that the continuation of Sahai and Jaiswal in office would be politically untenable.
“The Congress leadership seems to realize that the involvement of party members in the controversial allocation of coal blocks has thickened the perception of collusion between the government and the allottees of blocks, handing opposition a stick to beat it with,” the report said.
In another report, The Times of India said that the union coal ministry actually sent a notice to a Nagpur based company a few months back as it thought the company was “profiteering” even though the ministry now maintains that no one profited from the way it allocated coal blocks.
“Despite some other firms too having passed on their block to a third party for a premium, the ministry sent a notice to only one company—Topworth Urja and Metals Ltd. Ironically, it is the buyer who got the notice and not the original promoters of Shree Veerangana Steels Ltd, from which the coal block was transferred to the latter. Shree Veerangana is promoted by former president of Vidarbha Industries Association(VIA) Mohan Agrawal,” the report said.
“However, even though it objected to “profiteering” by this company, it took no other action beyond sending the notice. Even this came six years after the company had transferred the block to another for windfall gains,” the newspaper noted.
“Sources said this was not the lone case of profiteering by selling stake. B S Ispat Ltd and Gondwana Ispat Ltd, both the companies which had Agrawal and Govind Daga, another prominent city businessman, as partners have transferred the coal blocks to a third party. However, this time they used a smart move. Instead of transferring the assets to a different company, the promoters simply sold their entire stake to Orissa-based OCL Iron and Steel Company,” the report further said.
In what could queer the pitch for companies that were allotted captive coal mines by the Atal Bihari Vajpayee-led government, the Public Accounts Committee (PAC) looking into the allocations could call government officials who were involved in allotting blocks at that time.
“Senior PAC members believe, besides former coal secretaries during UPA-I (United Progressive Alliance-I), those during the National Democratic Alliance (NDA) rule should also be called to find out about the policy decisions during the Atal Bihari Vajpayee government,” the Business Standard newspaper said in a front page report on Tuesday.
“PAC may also call members of the screening committee who were part of the allocation process, to know how many times they had met before deciding on the allocation of coal blocks to private companies. The BJP had alleged the committee had not met after mid-2008, but the Union government continued to allocate coal blocks to benefit some,” the newspaper report added.
In another report, The Times of India said that between 2006 and 2010, government owned NTPC Ltd “awarded a coal mine contract worth over Rs.23,000 crore to a joint venture company in which 10% shares are held by the family of former coal minister Santosh Bagrodia.”
“Significant parts of the tender for awarding Pakri-Barwadih (PB) coal block took place when Bagrodia was minister of state for coal in the UPA government. The company which lost out in the race for the contract was another PSU, Singareni Collieries Co. Ltd, that reported directly to Bagrodia,” the newspaper report added.
Bagrodia however denied any involvement, according to the paper.
Meanwhile, The Economic Times newspaper said Monday that 10 of the 29 coal blocks that are on the radar of the inter-ministerial group, could be taken back, “as their owners have not been able to do much to develop them for years, and have not put up a strong case to convince the panel of officials scrutinizing the allocations.”
“The government had issued show-cause notices to companies, including state firms, not doing enough to develop the blocks. The notices show that in 15 blocks, the owners had met almost no milestone for development for two to five years. Many were stuck because they were waiting for government clearances. About 11 companies have delayed their application for forest and environment clearance as well as application for mine-opening permission by anything between two years and 12 years,” the report said.
The Central Bureau of Investigation (CBI) has shortlisted companies and officials it would question in the coal block allocation issue, the Press Trust of India (PTI) reported Monday.
“Agency sources said in the first batch, the accused named in the FIRs against JLD Yavatmal Energy Ltd, JAS Infrastructure Capital Pvt. Ltd and AMR Iron and Steel Pvt. Ltd are likely to be called at its headquarters in Delhi for examination,” the PTI report that was published by the DNA newspaper said.
“CBI sources said the officials of screening committee in which the coal blocks were cleared and officials who screened the applications would also be asked to record their statements in connection with the probe. They said the teams which had gone for raid have collected documents, laptops, hard drives from various locations and were scrutinizing the details from them.
Meanwhile, The Times of India said in a report that several opposition leaders attacked Congress member of parliament Naveen Jindal, who promotes Jindal Steel and Power Ltd, which has been under the scanner on the coal block allocation issue.
“We are against captive coal allocation. Jindal is the biggest allottee. The policy was uncalled for. The companies got cheap coal blocks and sold power dearly. We demand cancellation of all coal blocks,” the news report cited CPM general secretary Prakash Karat as saying.
Parties belonging to the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) also came down heavily on the company, “marking a rare Left-Right tandem on an issue”, the report added.
Jindal however denied the allegations that his company was unduly favoured. In a report, CNN-IBN news channel cited Jindal as saying that the government had invited 28 companies, of which only two had the experience to convert coal to liquid fuel and that, “his company had the best credentials.”
“We were not squatting on the coal blocks. Mining is a tough business to start,” the channel quoted Jindal as saying.
On Monday, the coal ministry said that it had sought details of coalfields from allottees. The inter-ministerial group (IMG) that’s looking into the controversial allocations and whether they should be cancelled has asked the companies to furnish documents certified by authorized officials indicating the current status of their projects, Mint said in a report.
The coal ministry has also asked the companies to submit details of actual investments made vis-à-vis what was originally planned when the companies had set out to develop the coal blocks. The government also wants to know how much each company wants to invest in the final power, steel or cement plant that is it developing, the report added.
The Wall Street Journal (WSJ) said on Monday that the coal controversy had “created a new obstacle to the beleaguered government’s agenda.”
“The paralysis in government has hurt Congress’s popularity, according to a recent poll. A recent NDTV-Ipsos poll surveying 103 seats of the country’s 543 seats in the Lower House of Parliament showed the governing coalition’s tally would plummet to 20 seats if an election were held today, fewer than half the 52 it currently holds in those districts,” the WSJ report said.
“The BJP’s stalling of Parliament hasn’t done much for that party, which along with its allies could see its tally rise to 33 from 26, the poll found. An array of smaller, regional parties—like those Congress allies who have hobbled economic overhauls—could be the winners, leading to further political fragmentation and a less decisive government,” the report cited analysts as saying.
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 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
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 analysing 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, Mint had 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.
“Like his father, Vijay, who is chairman and editor-in-chief of the Lokmat group, too, has lived in the shadow of controversies. In Nagpur’s ugly media war in the 80s, Nagpur Times, then an influential local English daily, ran a sustained campaign against the Dardas, carrying reports of ‘illegalities’ in the construction of the 13-storey Lokmat Bhavan in Nagpur,” the report noted.
“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
On Saturday, citing documentary evidence, The Times of India reported that the government-owned Puducherry Industrial Promotion Development Corporation (PIPDIC) signed a pact with J R Power Gen Pvt. Ltd, “owned by Union minister S. Jagathrakshakan’s family, to sell coal at a throwaway price of Rs.25 per tonne even before it was allotted a coal block.”
“J R Power (JRP), which did not have any prior experience in the coal sector, approached the government on 14 December 2006, with an offer for joint exploitation of coal blocks,” the report said. “JRP promised a royalty of Rs25 per tonne of coal to the Puducherry government besides 10% of the power generated in the proposed power projects. On 17 January 2007, PIPDIC entered into a memorandum of understanding with JRP to sell coal at Rs.25 per tonne for a period of 30 years or until the coal resources in the block exhausted, whichever was earlier. Jagathrakshakan quit as director of the company in 2009 to contest Lok Sabha polls, but his family members continue to be on the board of the company.”
“A coal block at Naini in Odisha with about 500 million tones of reserve was allocated to PIPDIC and Gujarat Mineral Development Corporation (GMDC) on 25 July 2007. Months later, JRP sold 51% of its stake to Hyderabad-based KSK Energy Ventures Ltd, an established player with interests in the energy sector,” the report further said.
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 Firstpost.com 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.
“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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