SC verdict on coal: Coalgate is 94% Congress scam, 6% others

Editor’s note: Firstbiz is republishing this article in light of the Supreme Court order which declared all coal block allocations from 1993 to 2011 as illegal. This article was firstpublished in 2012.

“Hum to doobe hain sanam, par tumko bhi le doobenge,” was a line often used in Hindi movies of the sixties, seventies and eighties. This line now applies to the Congress party as it tries to divert the attention from its involvement in the coal blocks allocation (Coalgate) scam.

The Central Bureau of Investigation (CBI) will now widen the scope of its inquiry into the scam to cover the allocation of all coal blocks given away for free to private companies, including state government entities, ever since the policy was first initiated in 1993.

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_"_The ongoing CBI inquiry covers 67 blocks allotted to private parties since 2004 when the ruling United Progressive Alliance (UPA) came to power," reports the Business Standard. The CBI will now probe all the allocations made to private companies going back to 1993.

This means that the inquiry will now also look at allocations made to private companies before the Congress-led UPA came to power. “The probe will now cover the blocks given during the six-year tenure of the BJP-led NDA government, from 1998 to 2004, besides those allotted by the Congress government led by PV Narasimha Rao after 1993 and the United Front government from 1996 to 1998. Till now, the CBI was investigating private companies that got blocks between 2004 and 2009,” reports _The Hindu.
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This widening of the inquiry came on the basis of a reference made by the Central Vigilance Commission (CVC). The reference made by the CVC was in response to a letter written by Coal Minister Sriprakash Jaiswal drawing the attention of the commission to the concerns of seven MPs of the UPA. These MPs included Sandip Dikshit, Harish Chaudhary, Ravneet Singh and Raghuveer Singh Meena.

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[caption id=“attachment_467675” align=“alignleft” width=“380”]  While any investigation has to expose those who are guilty, it still does not change the fact that Coalgate has largely been a Congress scam.Reuters[/caption]

In a letter written to the Coal Minister on 5 September 2012, the MPs said: “It appears that there were many cases of malpractice while allocating blocks between 1993 and 2004. All blocks allotted since 1993 should be investigated by the CBI, specially looking at systems through which state governments selected private companies whose names they forwarded to the government.”

While any investigation has to expose those who are guilty, it still does not change the fact that Coalgate has largely been a Congress scam. This is clearly pointed out by the numbers in the Provisional Coal Statistics 2011-12, put out by theCoal Controller’s Organisation, Ministry of Coal.

A total 195 coal blocks have been allocated between 1993 and 2011. Of these only 39 were allocated prior to 2004. Hence, only 20 percent of the coal blocks were allocated in the period prior to 2004. As we know, the Congress-led UPA has been in power since May 2004.

Things get even more interesting when we measure allocations in terms of the geological reserves these coal blocks (i.e. the amount of coal) have. In fact, the total geological reserves of the coal blocks given away for free between 1993 and 2011 stands at 44,802.9 million tonnes.

The coal blocksallocated between 2004 and 2011 (when the UPA was in power) have geological reserves amounting to a total of 41,235.9 million tonnes. This means that 92 percent of the total geological reserves were given for free during 2004-11. This is the Congress part of the scam.

To this we also need to add the coal blocks given away for free during the 1993-96 period, when a Congress government led by PV Narsimha Rao was in power. During this period nine blocks with geological reserves of 917.7 million tonnes were given away for free. Hence, the Congress party was directly involved in giving away 42,153.6 million tonnes, or 94 percent of the total reserves, for free.

These numbers include both private and government-owned companies. The scope of the investigation as we know is limited to coal blocks given away for free to private companies. I couldn’t locate any data that gives the exact breakdown of the geological reserves of coal blocks allocated to private companies between 1993 and 2003, and then between 2004 and 2011. But the report put out by the Comptroller and Auditor General (CAG) of India does give us some information on this front.

The total geological reserves of coal blocks given away to private companies (excluding ultra mega power projects) for free between 1993 and 2009 amounted to 17,397.22 million tonnes. Of this, a total of 14,060.34 million tonnes was allocated between 2006 and 2009, when the free giveaway of coal blocks was at its peak. Also, Prime Minister Manmohan Singh was also the Coal Minister for a large part of this period.

So, around 81 percent of the the total geological reserves given to private companies was given between 2006 and 2009. We don’t have an exact breakdown for the earlier years. If we did the number would have been significantly higher.

What these numbers clearly tell us is that Coalgate is largely a Congress scam. There might have been corruption during periods of non-Congress rule and that cannot be denied. But as we saw, chances are that as much as 94 percent of the total geological reserves were given away for free during periods of Congress rule.

Between 2004-2005 and 2008-2009 there was a rally in global commodity prices as China expanded at breakneck speed, gobbling up commodities from all over the world. Hence, the price of coal shot through the roof.The international price of coal was a little over $20 per metric tonne in mid-2003. It shot up to around $40 per metric tonne in mid-2005 and kept rising after that.Prices shot up to around $190 per tonne internationally in mid-2008. As the price of coal shot up, so did the number of coal blocks given away for free by the Congress-led UPA.

Given this, asking the CBI to investigate everything from 1993 onwards is just a step towards diluting the scope of the investigation and hoping to gather some political ammunition against the opposition parties. As Business Standard reports, “If the inquiry raises questions over allocations during the National Democratic Alliance (NDA) regime, it will provide the government with political ammunition to counter criticism by the Opposition.”

Vivek Kaul is a writer. He can be reached at vivek.kaul@gmail.com