COAL-GATE SCAM

BY: SONGITA DAS SHASHI SHEKHAR VAISHNAVI KUMARI SWAPNIL KUSHWAH

IMPORTANCE OF COAL

Key contributor. Third largest producer. Fifth largest reserves. Commercial requirement. Largest domestic reserve.

Demand to increase in next 10 years.

OVERVIEW:
Nationalization of Coal Mining Industry (1972-76) Coal Mines Amendment Act 1976 terminated coal mining leases with private lease holders. Nationalized coal companies were unable to fully meet demand.

COAL ALLOCATION GUIDELINES

Preference to Power and Steel Sectors Level of progress and state of preparedness of the projects Net worth of the applicant company Production capacity as proposed in the application Maximum recoverable reserve as proposed in the application Date of commissioning of captive mine as proposed in the application Date of completion of detailed exploration (in respect of unexplored blocks only) as proposed in the application Technical experience Recommendation of the administrative ministry concerned Recommendation of the state government concerned Track record and financial strength of the company

SCREENING COMMITTEE:

MINISTRY OF COAL

MINISTRY OF RAILWAY

RELEVANT STATE GOVERNMENT

COAL-GATE SCAM :
Political Scandal concerning Indian governments allocation of nations coal deposits to Public Sector Entities (PSEs) and Private companies. Comptroller & Auditor General of India(CAG) accused Government of India of allocating coal blocks in an inefficient manner. BJP lodged complaint resulting in CBI probe into whether the allocation of coal block was influenced by corruption.

WAS GOVERNMENTS METHOD FLAWED:

Forgery. Lobbying of coal-blocks. Selling in Open-market. Production. Environmental Clearance.

OBJECTIVES OF CAG AUDIT

Understanding the Widening Gap between demand and domestic supply of Coal Understanding increasing Coal Import Reasons for Power Plants lying Idle due to lack of supply of coal Augmentation of CIL production capacities as per plan Procedures followed for coal block allocation for captive mining Coal block allocated as envisaged

CAG ALLEGATIONS
The allocation was opaque & subjective.

In 2005 the Government had the legal authority to auction coal blocks.
"windfall gains" to the allocatees were 185,591 crore (US$33.78 billion)

There was no legal impediment for competitive bidding.

* 194 coal blocks out of 216 with aggregate geological reserve of 44.44 billion tone stood allocated as of March,2011.

* Wind falls gains

ALLEGATION AGAINST
S JAGATHRAKSHANAN

SUBODH KANT SAHAI

AJAY SANCHETI VIJAY DARDA & RAJENDRA DARDA PREMCHAND GUPTA NAVEEN JINDAL

ISSUE OF COMPETITIVE BIDDING

2004
Allocation of captive block made public

2008
Bill to amend MMDR Act 1957 Bill referred to standing committee

2010
Motion was passed in parliament post approval of standing committee

2012
Rules of auction notified to all stakeholders

GOVERNMENTS DEFENCE:
POLICY PERSPECTIVE LEGAL PERSPECTIVE PRACTICAL PERSPECTIVE

Against opposition: STATES ruled by BJP had also opposed public auction of mines.

STEPS TAKEN BY GOVERNMENT:

Formation of Inter Ministerial Group (IMG) in June,2012 De-allocation Govt. Forfeited bank guarantee By September 31 coal blocks reviewed. STEPS TAKEN : De-allocation of 13 coal blocks. Encashment of Bank Guarantees of 14 allotters.