Coal-gate: Inter-ministerial group advises cancellation of three more coal blocks – India

15 sept 2012

Coal-gate: Inter-ministerial group advises cancellation of three more coal blocks

 

Dr Sanjay Kumar Cardiothoracic Cardiac Heart surgeon India

New Delhi: The inter-ministerial group on coal blocks has advised the cancellation of three more coal blocks today. The group, looking into allegations that the government implemented a coal policy that provided windfall benefits to private players and cost the country thousands of crores, recommended that the licences of Gourangdih ABC Coal Block, Rawanwara North Coal Block and New Patrapara Coal Block, be cancelled.

If the recommendations of the inter-ministerial group are accepted by the Coal Ministry, the number of blocks cancelled for insufficient progress would go up to seven.

The Gourangdih ABC Coal Block was allotted to M/s Himachal EMTA Power Limited and M/s JSW Steel Limited in 2009 – the latter owned by Sajjan Jindal, elder brother of Congress MP Naveen Jindal. The JSW wanted to use the coal block for its steel plants; however, only the mining plan was submitted.

The Ravanwara North Coal Block was allotted to SKS Ispat and Power Limited in 2007. Tourism Minister Subodh Kant Sahai’s brother Sudhir Kant Sahai, has in the past, held the position of “honorary director” in SKS Ispat.

The New Patrapara Coal Block was allotted to Bhushan Steel in 2006. The block has an extractable reserve of 316.09 million tonnes. It was meant to be used for making sponge iron, which finds application in steel manufacturing.  The block is also mentioned in the Comptroller and Auditor General’s (CAG) report which had estimated that the company got undue benefit to the tune of Rs. 9,338 crore.

The group has also recommended the deduction of Bank Guarantee in the cases of Nerad Malegaon Block allotted to M/s Gupta Metaliks and Power Limited and Gupta Coalfields Limited, Lohari Block allotted to Usha Martin Limited, Radhikapur East Coal Block allotted to M/s Tata Sponge Iron Limited and others, and Bijahan Coal Block allotted to Bhushan Limited.

The inter-ministerial group has so far scrutinised the replies by 18 coal block allottees, including four today, in its three meeting in the last four days. It would meet again on Monday.

The group is scrutinising 29 blocks awarded to private firms out of the total 58 which were given show-cause notices for delays in developing mines.

Some of the blocks recommended for de-allocation find mention in the CAG report, which had recently estimated that undue benefits to the tune of Rs. 1.86 lakh crore have been accrued to private firms due to allocation of 57 mines without auction.

Action against defaulters and under-achievers was promised by the government after a report by the national auditor said the government had lost upto 1.86 lakh crores because its coal allocation policy was not transparent. The auditor or CAG said coal fields should have been auctioned. The government responded that earlier laws did not allow for a competitive bidding process, and that the extensive process required to change policy would have hurt industrial development and the economy.

Its defence has been somewhat punctured by the fact that a long list of firms that got coal fields at a fraction of their true worth then failed to begin mining.  While the inter-ministerial group is looking at companies guilty of squatting, the CBI has begun filing cases against firms and their executives who misreported their finances and technical expertise to corner coal blocks.

The coal scandal paralysed the Monsoon session of Parliament because of daily disruptions by the main opposition party, the BJP, which is demanding the PM’s resignation over “coal-gate.”