Coal sector embroiled in block allocation controversy in 2013

New Delhi: Coal blocks allocation controversy saw its flames reaching high offices like PMO,besides stalling Parliament sessions and the CBI filing charges against likes of Birla empire scion Kumar Mangalam Birla.

The scam also saw CIL remaining tangled in fuel supply row with power majors in 2013.

Lok Sabha and Rajya Sabha both were rocked during various sessions with opposition BJP demanding Prime Minister Manmohan Singh’s resignation for allotment of mines without auction during 2006-09 when he also held coal portfolio.

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Government also came under sharp attack on the issue of crucial files of Coal ministry going missing, with the Opposition demanding an impartial probe into it.

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Under intense pressure, Coal Minister Sriprakash Jaiswal who admitted that crucial files and documents were missing, had to announce constitution of search teams to locate the same against a background where the Supreme Court set a deadline for handing over the same to the CBI.

The sector witnessed a high-decibel drama in October again when CBI lodged a case against industrialist Kumar Mangalam Birla and former Coal Secretary P C Parakh on charges of criminal conspiracy and corruption in connection with alleged irregularities in allocation of coal blocks, eight years back.

However, Birla, who drew all round support from the industry and some ministries, rubbished CBI charges against him while Parkah dubbed the allegations against him as baseless and said Prime Minister was the final decision maker and must be counted as a “conspirator”, which prompted BJP to demand a through probe.

The case involving Birla created a political furore and led to a renewed demand by the Opposition for the Prime Minister’s resignation leading to breaking of silence by the Prime Minister’s Office which rejected any criminality in the controversial allocation of coal block to Hindalco.

The sector also made headlines when MP Naveen Jindal and former Minister of State for Coal Dasari Narayana Rao were accused of alleged cheating and graft by CBI in its FIR in thecoal scam.

The government watchdog CAG last year had estimated a Rs 1.86 lakh crore presumptive loss to the exchequer on account of allotment of 57 coal blocks without competitive bidding.

It was during the year when the ministry tightened the noose round firms sitting idle on mines and deallocated 11 coal blocks including that of JSPL, Gagan Sponge and Monnet Ispat & Energy for not beginning production from mines alloted for captive use.

Amid the controversies shrouding the sector, the world’s largest coal miner CIL locked horns with power major NTPC over the quality of coal.

NTPC felt that the world’s largest coal producer was supplying “rocks and boulders” just to meet its supply commitment.

Following which Coal India (CIL) switched off the supply of coal to the power major and the government had to finally intervene to resolve the issue.

NTPC finally signed fuel supply agreements (FSAs) with CIL on the assurance that the mechanism for third party sampling of coal would be put in place, which began in October.

However, despite government setting several deadlines for concluding FSAs between CIL and power firms, so far the coal PSU could sign only 157 FSAs for a capacity of 71,145 MW outof 173 FSAs for 78,000 MW capacity.

Earlier, the government had to issue a Presidential directive to CIL asking it to enter into supply pacts with power plants for a capacity of 78,000 MW.

In order to commit 80 percent assured supply of coal to power firms under the FSAs, the government finally decided that CIL would supply 65 percent of the coal through domesticsources and the remaining 15 percent will be imported.

The government which earlier was mooting a proposal to pool the prices of domestic and imported coal under FSA to make the fuel affordable to new power plants had to bury the plans on account of sharp opposition to the scheme.

However, the Government later took a decision to allow power companies to pass on the cost of imported coal to consumers.

The sector also witnessed much hue and cry when the government went ahead with its proposal of divestment in CIL.

The earlier proposal of divesting 10 percent in CIL had to be brought down to 5 percent due to strong opposition from employees union of the maharatna firm which threatened to go on strike.

CIL strike which was earlier scheduled for September was later deferred to December. However, in December the CIL workers’ union announced its postponement.

During the year, the government succeeded in introducing in Lok Sabha a Bill to set up an independent coal sector regulator with the task of conserving resources and charting methodology for price fixing.

The Coal Regulatory Authority Bill, 2013, came amid the sector grappling with multiple woes, including shortfall in production and allegations of irregularities in allocation of mines.

The year also saw the government approving the methodology for auction of coal blocks which provides for upfront and production-linked payments and benchmarking of coal sale prices.

However, the much-hyped auctions could not take off despite Coal Minister Jaiswal stating many times that it would be done in 2013.

The Coal Ministry allotted 17 coal mines to both power and mining PSUs during the year.

PTI