COAL GATE SCAM

it is time we transform our systems

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

If a country is to be corruption free and become a nation of beautiful minds, I strongly feel there are three key societal members who can make a difference. They are the father, the mother and the teacher.

- Abdul Kalam
DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

 India is the third Largest producer of Coal in the world. The countrys domestic consumption is large and as a result, India net imports coal to meet the needs of power companies, steel mills and cement producers. Indias coal demand is expected to increase multifold within the next five to 10 years, due to the completion of ongoing power projects, and demand from metallurgical and other industries. Government-controlled Coal India Limited (CIL) dominates the domestic coal supply market with an 80 percent market share, although some industrial consumers, typically in the power and steel sectors, have access to captive mines.

IMPORTANCE OF COAL

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

INDIAS GROWING POWER NEEDS

Energy Requirement and Energy Availability in the country from 1984-85 to 2010-11 Rate of Growth Energy Energy Energy Percentage Energy Energy Short YEAR Requirement Availability Short Requirement Availability (MU) (MU) (MU) % Shortage (%) (%) 1984 155432 145013 10419 6.70% 1985 170746 157262 13484 7.90% 8.97 7.79 1986 192356 174276 18080 9.40% 11.23 9.76 1987 210993 187976 23017 10.91% 8.83 7.29 1988 223194 205909 17285 7.74% 5.47 8.71 1989 247762 228151 19611 7.92% 9.92 9.75 1990 267632 246560 21072 7.87% 7.42 7.47 1991 288974 266432 22542 7.80% 7.39 7.46 1992 305266 279824 25442 8.33% 5.34 4.79 1993 323252 299494 23758 7.35% 5.56 6.57 1994 352260 327281 24979 7.09% 8.23 8.49 1995 389721 354045 35676 9.15% 9.61 7.56 1996 413490 365900 47590 11.51% 5.75 3.24 1997 424505 390330 34175 8.05% 2.59 6.26 1998 446584 420235 26349 5.90% 4.94 7.12 1999 480430 450594 29836 6.21% 7.04 6.74 2000 507216 467409 39807 7.85% 5.28 3.6 2001 522537 483350 39187 7.50% 2.93 3.3 2002 545674 497589 48085 8.81% 4.24 2.86 2003 559264 519398 39866 7.13% 2.43 4.2 2004 591373 548115 43258 7.31% 5.43 5.24 2005 631757 578819 52938 8.38% 6.39 5.3 2006 690587 624495 66092 9.57% 8.52 7.31 2007 739343 666007 73336 9.92% 6.59 6.23 2008 777039 691038 86001 11.07% 4.85 3.62 2009 830594 746644 83950 10.11% 6.45 7.45 2010 861591 788355 73236 8.50% 3.6 5.29 Average Rate of Growth 6.35 6.28

Source :Press Information Bureau Website (Ministry of Power Statistics)

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

INDIAS GROWING COAL IMPORTS

Huge demand-supply gap compels increased import of coal

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

COAL ALLOCATION GUIDELINES

Preference to Power and Steel Sectors Level of progress and state of preparedness of the projects Net worth of the applicant company 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 Recommendation of the administrative ministry concerned Recommendation of the state government concerned Track record and financial strength of the company

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

WHO DECIDES WHO WILL RECEIVE COAL BLOCKS

Ministry Of Coal

Screening Committee

Government Officials (Ministry Of Coal)

Government Officials (Ministry Of Railways)

Government Officials (State Government)

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

CAG AUDIT

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Coal Gate Scam

OBJECTIVES OF AUDIT
Understanding the Widening Gap between demand and domestic supply of Coal Understanding increasing Coal Import Reasons for Power Plants lying Idle due to lack of supply of coal Augmentation of CIL production capacities as per plan Procedures followed for coal block allocation for captive mining Coal block allocated as envisaged

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

CAG ALLEGATIONS
There was no clearly spelt out criteria for the allocation of coal mines In 2005 the Government had the legal authority to allocate coal blocks by auction rather than the Screening Committee, but chose not to do so As a result of its failure to auction the coal blocks, public and private companies obtained "windfall gains" of 1,067,303 crore (US$193.18 billion), with private companies obtaining 479,500 crore (US$86.79 billion) (45%) and government companies obtaining 507,803 crore (US$91.91 billion) (55%). there was no legal impediment to introduction of transparent and objective process of competitive bidding for allocation of coal blocks for captive mining as per the legal opinion of July 2006 of the Ministry of Law and Justices and this could have been done through an Administrative decision

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

COAL ALLOCATION OVER THE YEARS

Source: Draft CAG Report, Table 5.1

The foregoing supports the following conclusions: The allocation process prior to 2010 allowed some firms to obtain valuable coal blocks at a nominal expense The eligible firms took up this option and obtained control of vast amounts of coal in the period 2005-09 The criteria employed for awarding coal allocations were opaque and in some respects subjective.
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Coal Gate Scam

WINDFALL GAINS TO ALLOCATEES (IN CRORE)

Source: CAG Final Report, p. 31

The headline number of 185,591 crore (US$33.59 billion) is the gain that would accrue to captive firms over these decades, and there is no attempt to derive a Present value of the gain. Loss of Opportunity

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Coal Gate Scam

ISSUE OF COMPETITIVE BIDDING

Source: CAG Final Report, p. 25,26,27

The concept of allocation of captive coal blocks through competitive bidding was made public in 2004. The matter was in discussion in Cabinet up to 2008. A bill to amend MMDR Act 1957 was introduced in Parliament by Ministry of Mines in 2008. The amendment bill was referred to the standing committee in 2008-09 The motion was passed in parliament post approval of standing committee in 2010 Rules of Auction notified to all stakeholders in 2012 CAG STATES
Competitive Bidding could have been introduced in 2006 as per the advise of (Department of Legal Affairs) in July 2006 DLA

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

GOVERNMENTS DEFENSE ON BIDDING

Source: Prime Ministers speech in Parliament

From a policy perspective, Government agrees with CAG that all parties consented to a move from allocation by screening committee to competitive bidding should begin. From a legal perspective, Government disputes the CAG's understanding of the law, and says, indeed, that such a conclusion could only have been arrived at by a selective reading of the evidence. From a practical perspective, Government notes that even were the legal path clear, it was not simply possible to introduce the competitive bidding process by fiat. There were multiple parties whose consensus was required in the transition to competitive bidding with varied, and sometimes divergent interests. The major coal and lignite bearing states like West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan that were ruled by opposition parties, were strongly opposed to a switch over to the process of competitive bidding as they felt that it would increase the cost of coal, adversely impact value addition and development of industries in their areas and would dilute their prerogative in the selection of lessees. The CAG, Prime Minister Manmohan Singh argued, had simply ignored the practical realities of policy implementation in their accusation that the Government did not move fast enough in transitioning to competitive bidding.
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Coal Gate Scam

GOVERNMENTS DEFENSE ON REVENUE LOST

Source: Prime Ministers speech in Parliament

Firstly, computation of extractable reserves based on averages would not be correct. Secondly, the cost of production of coal varies significantly from mine to mine even for CIL due to varying geo-mining conditions, method of extraction, surface features, number of settlements, availability of infrastructure etc. Thirdly, CIL has been generally mining coal in areas with better infrastructure and more favorable mining conditions, whereas the coal blocks offered for captive mining are generally located in areas with more difficult geological conditions. Fourthly, a part of the gains would in any case get appropriated by the government through taxation and under the MMDR Bill, presently being considered by the parliament, 26% of the profits earned on coal mining operations would have to be made available for Therefore, aggregating the purported financial gains to private parties merely on the basis of the average production costs and sale price of CIL could be highly misleading. Moreover, as the coal blocks were allocated to private companies only for captive purposes for specified end-uses, it would not be appropriate to link the allocated blocks to the price of coal set by CIL local area development.

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

CORRUPTION INVESTIGATIONS
S Jagathraksha kan

Premchand Gupta

Subodh Kant Sahai

Accused Ajay Sancheti Nitin Gadkari Naveen Jindal

Vijay Darda

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

Investigations on accused

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

MY OPINIONS

COAL SCAM
POLICY PROBLEM
CORRUPTION PROBLEM

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

SOLUTIONS
We live in the age of information and technology Many of our processes are obsolete and old. Government has serious Governance problems and they need to fix their systems. Competitive Bidding a compulsion in all sectors All processes need to be revised and parallel synchronized with IT systems Utilization of UID Adhaar card for distribution of any service and product UID mechanisms for Transparent Bidding Fraud Analytic facilities by Government for immediate actions on corruption or fraudulent activities Use of IT for monitoring Coal Production
DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam

WE REQUIRE OPTIMISM
We need to take these scams in a positive spirit It is good to know ones weakness It gives us an opportunity to improve We should respect our Government and our Constitution We should look for IT Solutions for better Governance We need to help our Government improve We need to make our Parliament better by electing bringing intellectual youth WE WILL IMPROVE FOR SURE

INDIA IS DOING WELL AND IN THE COMING YEARS WILL ROCK !!

Respect National Symbols

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Coal Gate Scam

Thank You

DAYALBAGH EDUCATIONAL INSTITUTE FACULTY OF SOCIAL SCIENCES

Coal Gate Scam