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Will ‘Coalgate’ take down the Congress and PM?

GoaChronicle.com provides our readers with the brief summary of the Comptroller Auditor General (CAG) – India report on Coalgate – a scam estimated at Rs 1,86,000 crore. Prime Minister Manmohan Singh held the portfolio of the Union Ministry of Coal and Mines during the tenure of the allocation of the bids to private parties…

The corruption in the UPA-II government appears to have crossed its own previous best in loss to the government exchequer, while the loss in 2G scam was estimated at 1.76 lakh crore, CAG in its report has dropped another bomb in which the Centre has caused the exchequer a loss of Rs 1.86 lakh crore in what is now being called ‘Coalgate’.

The warnings on the irregularities in the scheme by officials in different cases were ignored owing to deep-rooted politician-babu-corporate nexus. Till June 2004, 39 coal blocks were allocated by the ministry on the basis of decisions of screening committee which evaluated applications without having a transparent blueprint.

“The concept of allocation of captive coal blocks was first made public on 28 June 2004 at an interactive meeting held with the stake holders under the chairmanship of the Secretary (Coal). Following the meeting, a comprehensive note on ‘Competitive Bidding for allocation of coal blocks’ was submitted (16 July 2004) by the then Secretary (Coal) before the Minister of State (Coal and Mines) highlighting that ‘there is substantial difference between the price of coal supplied by Coal India and coal produced through captive mining, there is a windfall gain to the person who is alloted a captive block,” CAG report 2012.

Surprisingly, the ministry continued to hand over 71 more blocks till September 2006 in total disregard for the need to bring in transparent regime for allocation through competitive bidding. Of the total, 49 blocks were given to the PSUs and other government departments but the scam happened in giving 57 slabs to the Private companies, including Tata Steel, Essar Power, JSPL, Hindalco, Bhushan Steel, Arcelor Mittal India and Adani Power.

As on June 2004, 39 coal blocks (net) stood allocated. During the period from July 2004 to September 2006 (till the time the matter was referred to Ministry of Mines for taking action on the issue of amendment of MMDR act for introduction of competitive bidding), 71 more blocks were allocated. In all, since July 2004, 142 coal blocks were allocated to various governments and private parties following the existing process of allocation. This allocation lacked transparency and objectivity. While admitting the above facts, the Ministry stated in March 2012 that the view that the system of bidding could be introduced through administrative instructions was given by the Ministry of Law and Justice on July 28, 2006 for the first time and in the light of the conflicting opinions, a reference was again made. MoLJ in its opinion dated 30 August 2006 after clarifying rationale for earlier opinion finally opined that the administrative ministry may initiate measures for amendment in the MMDR act. Pending the amendment in the Act, it proceeded to allocate coal blocks on the advice of ECC of July 2006. Finally with the amendment in the MMDR act, rules for auctions by competitive bidding of coal mines were notified on February 2 2012 after inter-ministerial consultations,” CAG report 2012

The financial gains of Rs 1.86 lakh crore happened in allocation of 57 “open cast” and “mixed” mines to private parties, the CAG report said ignoring the ministry’s reply that the allocation was never looked “as potential source for the Central government but with the intent to induce rapid development of infrastructure.”

A month after taking over the power, the UPA I made public on June 28, 2004 , the shift in concept of allocation of captive coal blocks from merely getting recommendation letter from states or ministries to competitive bidding, a process that did not rule out auction.

Prime Minister Manmohan Singh doubled up as the coal minister for five years. This began when Shibu Soren resigned from the coal ministry in 2004, owing to the arrest warrant issued against him in a murder case. But, since the last eight years, the UPA government continued to allocate the blocks in an arbitrary manner as the CAG itself points that there was nothing on record to suggest how the screening committee evaluated applicants.

Despite, these facts GOI is yet (February 2012) to finalise the modus operandi of competitive bidding.

“Captive coal mining is a mechanism envisaged to encourage private sector participation in coal mining. The procedure followed for allocation of coal blocks to captive consumers lacked transparency as the allotment of coal blocks to prospective captive consumers were made merely on recommendation from state government and other administrative ministries without ensuring transparency and objectivity,” CAG Report.

 

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