INTRODUCTION

Coal is the largest source of energy for the generation of electricity worldwide India ranks 3rd in Top Coal Producers with 509 Mt.(2011) India ranks 4th in Top Coal Impoters with 101.6 Mt.(2010)

About Coal Scam

Coal allocation scam is a political scandal concerning the Indian governments allocation of the nations 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.

About Coal Scam

Coal Scam happened between 1993 and 2012 and is still continuing and going on government of India gave away 206 coal blocks for free to government and private companies 41 out of the 206 blocks given away free were allocated before the end of 2003 165 blocks were allocated between 2004 and 2011 Since May 2004, UPA Congress is ruling India, thus Majority coal blocks were given free by Congress party of India

Contd..
Between

2006 to 2009 period, 134 coal blocks were

given away free

Prime

Minister Manmohan Singh was the Coal

Minister between period 2006 and 2009. From year 2006

The

government gave away 6282.5 million tonne of

coal for free

It

could have sold it at a certain price, mining this

coal would have involved a certain cost

How It Happen?
1. 2. 3.

4.

States such as Rajasthan, Chhatisgarh and West Bengal have opposed a bidding The industry players from varied backgrounds secured coal blocks These players took the state leadership into confidence and they would, in turn, recommend the name for block allocation political connections

KEY PLAYERS of scam

The key players in coal scam are: Comptroller and Auditor General of India (CAG). Prime Minister Manmohan Singh. Many electricity boards and companies

Core issues of coal scam

a.

b.

c.

Coal India Limited (CIL) was accorded sole rights to extract coal. But CIL has been failing to supply coal in the required quantities to endusers .This has emerged as a major constraint on Indias growth. To augment production of coal, UPA-I government decided to go for allocation of some coal blocks to a few major end-users in the public (like NTPC) and private sectors Instead of competitive bidding, the government went for selective allocation

reasoning behind CAG coming up

coal mined from the coal blocks given away for free could have been sold at a certain price in the market. Since the government gave away the blocks for free, it lost that opportunity

RESULTS OF COAL ALLOCATION PROGRAM

PROGRAM Given the allocation guidelines, CAG says that "there was no clearly spelt out criteria for the allocation of coal mines. 2010: the Mines and Minerals Act, 1957 providing for coal blocks to be sold through a system of competitive bidding

RESULTS OF COAL ALLOCATION PROGRAM

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

CAG Draft Report

The CAG report is a performance audit focusing on the allocation of coal blocks The Draft Report covers Audit Framework Coal Blocks-Allocation and Production Performance Institutional Framework Gaps in Supply and Demand

CAG Draft Report

Government had the legal authority to auction the coal, but chose not to do so Any losses as a result of coal allocations, then, between 2005 and 2009 are seen by the CAG as being the responsibility of the Government

CBI INVESTIGATION
On 31 May 2012, Central Vigilance Commission(CVC) based on a complaint of two BJP Member of Parliament Prakash Javadekar and Hansari Ahir directed a CBI enquiry There were leaks of the report in media in March 2012 which claimed the figure to be around 1,060,000 crore. It is called by the media as the Mother of all Scams.

Final Results of the coal allocation program

44 billion metric tons of coal being allocated to public and private firms. the entire world only produces 7.8 billion tons annually, with India being responsible for 585 million tons of this amount. Under the program, then, captive firms were allocated vast amounts of coal, equating to hundreds of years of supply, for a nominal fee.

Year of allocatio n

Government Companies No. of blocks GR (in MT)

Private Companies No. of blocks GR (in MT)

Power Projects

Total

No. of blocks
0

GR (in No. of GR (in MT) MT) blocks

0 70 53 52 24 16 9,631.6 17,791.53 11,862.22 3,549.52 6,892.55

Up to 2005 2006 2007 2008 2009

29 6,294.72 32 12,363.1 5

41 3,336.88 15 3,793.14 17 2,111.14 20 2,939.53 12 5,216.53

6 1,635.24 1 1 972 100

34 8,779.08 3 1 509.99 337

3 1,339.02

2010
Total

800

800
50,527.42

28,283.9 99 4

105 17,397.22

12 4,846.26 216

Prime Minister Manmohan Singh involved in all this

During 2006 and 2009, 134 coal blocks were given away for free. the coal blocks given away for free had geological reserves of around 40 billion tonne. India has around 286 billion tonne of geological reserves of coal. This means around 14% of total geological reserves of coal was given away free during the period Manmohan Singh was the coal minister.

WHY THE HEAT IS ON RELIANCE?

The Sasan Plant was Reliance Power is Developing a 4000 MW Plant then allotted a third under Ultra Mega Power Project at Sasan in coal-block, Chhatrasal Madhya Pradesh and was allotted two captive coal in October 2006 The Matter was referred to an Minister requested PM to Empowered Group of allow Reliance to use surplus Ministers (EGOM). It coal from the captive blocks recommended that Reliance of the Sasan UMPP for be allowed to use surplus another Power Project being coal from blocks allotted for developed by the company at Sasan for the other Project. Chitangi in the state.

OBSERVATIONS

Government unduly benefitted Private Power Developers in awarding of UMPPs. Developers misused and diverted coal made available to them Of the four UMPPs currently operational, three are owned by Anil Ambanis Reliance Power (RPL) and one by Tata power Mundra and Krishnapatnam UMPPs have land in excess of 1538 acres and 1096 acres EGOM allowed the excess land to be retained by the developers instead of utilizing the same for other public purpose

Ethical viewpoint
The coal is not an unlimited natural resource, like air So air need not be priced because it is unlimited, but coal needs to be priced because it is limited And if that had not been the case, the government would be giving away all the coal that Coal India produces for free

The Comptroller and Auditor General (CAG), in a recent report, estimated that the losses due to the policy of the government But the policy made by the government

CAG REPORTS VS. GOVERNMENT RESPONSE

Pvt. firm gain Rs. 1.86 lakh CAGs figure misleading. Of the 57 blocks THE LOSS crore after blocks given by cited, only one operational. nomination.