What the coal scam is all about

PRATIM RANJAN BOSE

dications were clear in the rejoinder issued by the Union Coal Minister Sriprakash Jaiswal last week, elaborating the roadblocks in introducing competitive bidding for block allotment.
HOW IT HAPPENED

For the arbitrary distribution of coal blocks, a wide swathe of the political and business class is responsible.
The report of the Comptroller and Auditor General of India (CAG) on coal block allotment to private parties amounts to a very damaging accusation of nancial irregularity. Unlike some other scams such as the much-publicised securities scam, fodder scam or even the latest 2G scam where a section of the business and politics class stood to gain, coalgate can unsettle the high and mighty across the board. Hence, there are strong doubts about whether the beneciaries of this staggering scam will ever be taken to task. The in-

States such as Rajasthan, Chhatisgarh and West Bengal have opposed a bidding process, Jaiswal said. This has left the state dispensation route a major source of corruption open. Examining the parties in power in these States since 2004, it is obvious that political groupings across the ideological spectrum Left, Right and Centre are allegedly involved in the scam. Similarly, the industry players who secured coal blocks were from varied backgrounds including those with no track record in power generation or even manufacturing. Yet, they managed to secure coal blocks against proposed projects. The route was simple: take the state leadership into condence and they would, in turn, recommend the name for block allocation. A little known Kolkata-based company, for example, promised huge capacities in Chhatisgarh.

The Centre may use this arguwith power purchase agreements ment, of coal being a nationalised and captive generation plans. resource, to counter the allegation GOVERNMENTS ARGUMENT that it deprived the nation of subIn its defence, the Government stantial revenues that could have now refers to the urgent need to been generated through auction. step up coal production and fuel There could not have been a beteconomic growth. ter policy than this, the Coal MinAnd, since Coal India (CIL) was ister has been quoted as saying. not in a position to cater to the The underlying argument is: to projected demand, policymakers auction the blocks the government were forced to draw an emergency needed to amend Mines and Minplan to ramp up production. As- erals (Regulation and Developsets which were yet to gure in the ment) Act. And, given the track CILs development agenda were record of the coalition politics, any dished out to captive users. such amendment could have been Between 2004 and 2009, a com- inordinately delayed. mittee headed by the Union Coal Even if we accept this argument, Secretary, distributed nearly 150 Jaiswals contention that the procblocks, more than two-thirds of ess of allotting blocks has been Only one of the 57 coal blocks awarded to the private sector is functional. AP the total of 215 blocks allotted transparent rings hollow. It is true since 1993. that the process adopted The beneciaries were selected post-2004 was better than the What the Central Minister did have any business to be there. The real beneciaries were big by a screening committee based on practices followed during 1993 and not say is that till date the political class, cutting across ideology, is yet players. A rough assessment shows project planning. A share of assets 2004, when 60 blocks were doled to come to terms with the decision that a couple of industrial houses, went to nominees identied by the out without any non-performance to auction blocks. And, it has suffi- as mentioned by the CAG, bagged a State Governments. Under the clause or earnest money. The cient reasons to be ill at ease with lions share of blocks. The Centre current legal dispensation, where broad-basing of the screening cannot deny responsibility, as at- CIL is the owner of all coal re- committee also helped to reduce the idea. It is with political connections tempted by Jaiswal, for awarding sources, it was argued that charg- the element of ad hoc selection. But, why did the government that certain corporates managed to blocks free of cost for merchant ing the beneciaries a price for acquire access to natural re- power generation, thereby helping being allotted the coal blocks was not restrict such allotment only for commercial power generation, ensources. The list of consortium private players earn a windfall not possible. Natural resources were given suring that such electricity be members in blocks makes it clear prot. And, we are not talking available to the nation either at a that there are many who do not about coal blocks allotted to rms free of cost.

regulated price or through PPA with designated distribution utilities? This simple measure could have ensured power for all at an affordable price. On the contrary, captive blocks were granted to steel, cement, merchant power and even downstream industries such as ferroalloys. They pocketed the benet of getting coal free of cost. Some yby-night operators even monetised the benet by selling their project plans to serious players.
DELIBERATE OMISSION?

And, going by the chain of events, the murmur of opposition voices even within the screening committee against such largesse, one may argue that some omissions were deliberate. Whats worse, only one of the 57 blocks allotted to private sector is developed and is in operation (the gures are just a shade better for the public sector). The bottom line: the nation was not merely deprived of revenues against allotment but also of the required coal production (which was the cornerstone of the argument in favour of such ad hoc distribution of assets free of cost) and is now paying for imports.