GROUP NO 7

COAL SCAM (COALGATE)

ATUL KAWAD CHETAN PAWAR DIBINESH URALATH

19 36 45

GROUP MEMBERS

INTRODUCTION
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure. Coal is composed primarily of carbon along with variable quantities of other elements, chiefly hydrogen, sulphur, oxygen, and nitrogen. Coal is the largest source of energy for the generation of electricity worldwide Coal is extracted from the ground by mining, either underground by shaft mining through the seams or in open pits. India ranks 3rd in Top Coal Producers with 509 Mt.(2011) India ranks 4th in Top Coal Impoters with 101.6 Mt.(2010)

 Coal allocation scam or Coalgate, as referred by the media, is a political scandal concerning the Indian government's allocation of the nation's coal deposits to public sector entities (PSEs) and private companies. In a draft report issued in March 2012, the Comptroller and Auditor General of India (CAG) office accused the Government of India of allocating coal blocks in an inefficient manner during the period 2004-2009. Over the Summer of 2012, the opposition BJP lodged a complaint resulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption.

 The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to. As a result both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the allocatees was 1,067,303 crore (US$193.18 billion). Later references in Parliament put the figure at 186,000 crore (US$33.67 billion) On August 27th, 2012 Indian Prime Minister Manmohan Singh read a statement in Parliament rebutting the CAG's report both in its reading of the law and the alleged cost of the government's policies.

 While the initial CAG report suggested that coal blocks could have been allocated more efficiently, resulting in more revenue to the government, at no point did it suggest that corruption was involved in the allocation of coal. Over the course of 2012, however, the question of corruption has come to dominate the discussion. In response to a complaint by the BJP, the Central Vigilance Commission (CVC) directed the CBI to investigate the matter. The CBI has filed charges against a dozen Indian firms accusing them of overstating their net worth, failing to disclose prior coal allocations, and hoarding rather than developing coal allocations. The CBI officials investigating the case have speculated that bribery may be involved.

 media reaction and The issue has received massive

public outrage. During the monsoon session of the Parliament, the BJP protested the Government's handling of the issue demanding the resignation of the Prime Minister and refused to have a debate in the Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of the session

KEY PLAYERS are: The key players in coal scam

Comptroller and Auditor General of India (CAG). Prime Minister Manmohan Singh. Many electricity boards and companies.

Comptroller and Auditor General on India(CAG)

The Comptroller and Auditor General (CAG) of India (Hindi: -) is an authority, established by the Constitution of India under Chapter V, who audits all receipts and expenditure of the Government of India and the state governments It also including those of bodies and authorities substantially financed by the government. The CAG is ranked 9th and enjoys the same status as a judge of Supreme Court of India in Indian order of precedence. The current CAG of India is Vinod Rai, who was appointed on 7 January 2008. He is the 11th CAG of India. The Comptroller and Auditor-General of India is appointed by the President of India following a recommendation by the Prime Minister. On appointment, he/she has to make an oath of affirmation before the President of India.

 Historically, the economy of India could be characterized as broadly socialist, with the government directing large sectors of the economy through a series of five-year plans. In keeping with this centralized approach, between 1972 and 1976, India nationalized its coal mining industry, with the state-owned companies Coal India Limited (CIL) and Singareni Collieries Company (SCCL) being responsible for coal production. This process culminated in the enactment of the Coal Mines (Nationalisation) Amendment Act, 1976, which terminated coal mining leases with private lease holders. Even as it did so, however, Parliament recognized that the nationalized coal companies were unable to fully meet demand, and provided for exceptions, allowing certain companies to hold coal leases: 1976. Captive mines owned by iron and steel companies. 1993. Captive mines owned by power generation companies. 1996. Captive mines owned by cement companies

WHO CAN APPLY

Who decides who receives a coal allocation?

In July 1992 Ministry of Coal, issued instructions for constitution of a Screening Committee for screening proposals received for captive mining by private power generation companies. The Committee was composed of government officials from the Ministry of Coal, the Ministry of Railways, and the relevant state government. A number of coal blocks, which were not in the production plan of CIL and SSCL, were identified in consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the website of the MoC for information of public at large. Companies could apply for an allocation from among these blocks. If they were successful, they would receive the geological report that had been prepared by the government, and the only payment required from the allocatee was to reimburse the government for their expenses in preparing the geological report.

What criteria are used in making the decision?

The guidelines for the Screening Committee suggest that preference be given to the power and steel sectors (and to large projects within those sectors). They further suggest that in the case of competing applicants for a captive block, a further 10 guidelines may be taken into consideration: status (stage) level of progress and state of preparedness of the projects; net worth of the applicant company (or in the case of a new SP/JV, the net worth of their principals); production capacity as proposed in the application; maximum recoverable reserve as proposed in the application; date of commissioning of captive mine as proposed in the application; date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application; technical experience (in terms of existing capacities in coal/lignite mining and specified end-use); recommendation of the administrative ministry concerned; recommendation of the state government concerned (i.e., where the captive block is located); track record and financial strength of the company

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