What is important- All the people in the country or the country's perception in the eyes of a few who will decide and certify the government as investor friendly, pro-active and supportive of development? What is the function of government- to protect the interests of the people or the interests of those who intend to destroy the environment for their private profit? What is development- a growth that delivers riches to the riches and misery to the poorest?
Let us not judge them without facts. So these are the facts-
The reason for allotting coal blocks to private companies was to boost coal production as Coal India Limited was unable to meet the huge demand in the country. Rather than allowing companies to become miners, the government decided to allot captive coal blocks, i.e, it allowed companies own and operate mines to meet their need for coal, the main industries being power and cement manufacturing. It is a wise decision since our power plants are working at low plant load factors due to unavailability of fuels. The government's decision not to auction coal blocks was to ensure low price for electricity.
So how did it determine who would get these coal blocks? A logical way would be to judge them on their ability to develop mining projects (since coal mining was nationalised, there is no point in considering coal mining experience or expertise), grant them without bias, take them back if fields are not utilised by the allottee and impose conditions on the price at which the output from coal is sold (electricity or cement) since they are getting the resource for free, make these conditions clear and keep them unchanged.
What actually happened was this- there was no logical way of choosing who should get these coal blocks. It was allotted in a completely opaque manner by a screening committee which has not made public the criteria it used to allot coal blocks. Therefore, the coal block allocation was arbitrary and opaque. Something that cannot be allowed in a democracy. The Government's defence- it used a screening committee and it was done by the state government. But how the screening committee decided who should be given coal blocks is also not clear.
http://www.frontlineonnet.com/stories/20120921291803600.htm
Reliance power was allotted a captive coal block for its Sasan Ultra Mega Power Plant(UMPP), which means the coal from the Moher and Moher-Amlohri extension and Chhatrasal blocks should be used for generating power at Sasan and this was the condition on which all companies submitted applications for coal block allotment. After the block was allotted, government allowed Reliance power to divert the coal from this block to another of its power plant. This has 2 major issues-
1)This power plant supplied power to highest bidder and so the defence of low electricity price goes out the window. This means that Reliance made money out of it, whereas the government loses revenue.
2)Permission to divert coal to other locations was granted after it was allotted and so it is an undue benefit granted to Reliance since there would have been more applicants and others suitable to get the block had they known that such an option existed
http://www.thehindu.com/news/national/article3784810.ece
Coal is a major mineral and central government has jurisdiction to decide policy on this matter. It had recommended auctioning as the route to allocating coal blocks as it was aware of windfall gains to private parties. Inspite of this, auctioning was not done and the government hides behind the "state government compulsion", perhaps a welcome change from "coal"ition compulsion.
http://www.thehindu.com/news/national/article3251983.ece
Since the reason for granting coal blocks without bidding was to ensure low electricity prices, there should have been the condition that those running power plants with coal from captive fields sell power at low rates. The government seems to have realised only now that such a step was necessary, in spite of it being so obvious. It is only going to regulate the price at which electricity is supplied by these companies.
http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-tariff-charged-by-captive-coal-block-owners-to-be-regulated/articleshow/16360164.cms
http://articles.economictimes.indiatimes.com/2012-09-09/news/33713621_1_coal-blocks-power-projects-jindal-power
The government has itself admitted that 57 blocks were allotted and only one has been developed so far and this means zero loss to the government.If the purpose was to meet the demand of industries, then not meeting this demand is a mistake and maladministration in itself. By not mining the coal, there is low capacity utilisation in power plants(remember the largest black-out in the world?) and thus loss of money to everyone!
http://www.thehindu.com/news/national/article3815701.ece?homepage=true
I am yet to find out whether those who were granted coal blocks to manufacture cement made cement at lower prices. Since only 1mine has been developed, perhaps this has not happened. If this happens, there are issues galore.
1)If they sell cement at market prices, they are getting huge profit since others have to pay market price for coal and they get it almost for free
2)If they sell cement at lower prices, they have an unfair advantage of cheap raw material.
These are the issues CAG has brought out in its report about what is now the infamous Coalgate scam
Let us not judge them without facts. So these are the facts-
The reason for allotting coal blocks to private companies was to boost coal production as Coal India Limited was unable to meet the huge demand in the country. Rather than allowing companies to become miners, the government decided to allot captive coal blocks, i.e, it allowed companies own and operate mines to meet their need for coal, the main industries being power and cement manufacturing. It is a wise decision since our power plants are working at low plant load factors due to unavailability of fuels. The government's decision not to auction coal blocks was to ensure low price for electricity.
So how did it determine who would get these coal blocks? A logical way would be to judge them on their ability to develop mining projects (since coal mining was nationalised, there is no point in considering coal mining experience or expertise), grant them without bias, take them back if fields are not utilised by the allottee and impose conditions on the price at which the output from coal is sold (electricity or cement) since they are getting the resource for free, make these conditions clear and keep them unchanged.
What actually happened was this- there was no logical way of choosing who should get these coal blocks. It was allotted in a completely opaque manner by a screening committee which has not made public the criteria it used to allot coal blocks. Therefore, the coal block allocation was arbitrary and opaque. Something that cannot be allowed in a democracy. The Government's defence- it used a screening committee and it was done by the state government. But how the screening committee decided who should be given coal blocks is also not clear.
http://www.frontlineonnet.com/stories/20120921291803600.htm
Reliance power was allotted a captive coal block for its Sasan Ultra Mega Power Plant(UMPP), which means the coal from the Moher and Moher-Amlohri extension and Chhatrasal blocks should be used for generating power at Sasan and this was the condition on which all companies submitted applications for coal block allotment. After the block was allotted, government allowed Reliance power to divert the coal from this block to another of its power plant. This has 2 major issues-
1)This power plant supplied power to highest bidder and so the defence of low electricity price goes out the window. This means that Reliance made money out of it, whereas the government loses revenue.
2)Permission to divert coal to other locations was granted after it was allotted and so it is an undue benefit granted to Reliance since there would have been more applicants and others suitable to get the block had they known that such an option existed
http://www.thehindu.com/news/national/article3784810.ece
Coal is a major mineral and central government has jurisdiction to decide policy on this matter. It had recommended auctioning as the route to allocating coal blocks as it was aware of windfall gains to private parties. Inspite of this, auctioning was not done and the government hides behind the "state government compulsion", perhaps a welcome change from "coal"ition compulsion.
http://www.thehindu.com/news/national/article3251983.ece
Since the reason for granting coal blocks without bidding was to ensure low electricity prices, there should have been the condition that those running power plants with coal from captive fields sell power at low rates. The government seems to have realised only now that such a step was necessary, in spite of it being so obvious. It is only going to regulate the price at which electricity is supplied by these companies.
http://economictimes.indiatimes.com/news/news-by-industry/energy/power/power-tariff-charged-by-captive-coal-block-owners-to-be-regulated/articleshow/16360164.cms
http://articles.economictimes.indiatimes.com/2012-09-09/news/33713621_1_coal-blocks-power-projects-jindal-power
The government has itself admitted that 57 blocks were allotted and only one has been developed so far and this means zero loss to the government.If the purpose was to meet the demand of industries, then not meeting this demand is a mistake and maladministration in itself. By not mining the coal, there is low capacity utilisation in power plants(remember the largest black-out in the world?) and thus loss of money to everyone!
http://www.thehindu.com/news/national/article3815701.ece?homepage=true
I am yet to find out whether those who were granted coal blocks to manufacture cement made cement at lower prices. Since only 1mine has been developed, perhaps this has not happened. If this happens, there are issues galore.
1)If they sell cement at market prices, they are getting huge profit since others have to pay market price for coal and they get it almost for free
2)If they sell cement at lower prices, they have an unfair advantage of cheap raw material.
These are the issues CAG has brought out in its report about what is now the infamous Coalgate scam
1 comment:
Wow! Very incisive and well researched! You pulled out all the facts in a very lucid and understandable manner! Awesome! :)
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