The CAG report, leaked to the press in March as a draft and tabled in Parliament in August, is a. Government auditor CAG on Friday said private firms are likely to gain Rs lakh crore from coal blocks that were allocated to them on. Overview. Coal is the most important indigenous source of energy for Indian economy with a geological reserve of 2,85, million tonne and.
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Coal allocation scam csg Coalgate  is a major political reporr concerning the Indian government’s allocation of the nation’s voal deposits to public sector enterprise Sscam and private companies. In a draft report issued in Marchthe Comptroller and Auditor General of India CAG office accused the Government of India of allocating coal blocks in an inefficient manner during the period — Over the Summer ofresulting in a Central Bureau of Investigation probe into whether the allocation of the coal blocks was in fact influenced by corruption.
The essence of the CAG’s argument is that the Government had the authority to allocate coal caag by a process of competitive bidding, but chose not to. While the initial CAG report suggested that coal ln could have been allocated more efficiently, resulting in more revenue to the government, at no point did it suggest that corruption was involved in the sam of coal. Over the course ofhowever, the question of corruption has come to dominate the discussion. These FIRs accuse them of overstating their net worth, failing to disclose prior coal allocations, and hoarding rather than developing coal allocations.
The issue has received massive media reaction and public outrage. During the monsoon session of the Parliament, the BJP protested the Government’s handling of the issue demanding the resignation of the prime minister and refused to have a debate in the Parliament. The deadlock resulted in Parliament functioning only seven of the twenty days of the session. The guidelines for the Screening Committee suggest that preference be given to the power and steel sectors and to large projects within those sectors.
They oj suggest that in the case of competing applicants for a captive block, a further 10 guidelines may be taken into consideration:. Results of the coal allocation program The response submitted in response to the PIL at Orissa on the allocation process between and was spectacular, with some 44 billion metric tons of coal being allocated to public and private firms. Out of the above blocks, 24 blocks were de-allocated three blocks intwo blocks inone block inone block inthree blocks inand 14 blocks in for non-performance of production by the allocatees, and two de-allocated blocks were subsequently reallocated and to others.
Hence, coal blocks, with aggregates geological reserves of The CAG report, leaked to the press in March as a draft and tabled in Parliament in August, is a performance audit focusing on the allocation of coal blocks and the performance of Cosl India in the —09 period. The Draft Report, stretching to over pages—far more detailed and containing more explosive allegations than the toned-down Final Report of some 50 pages—was the document that sparked the Coalgate furor.
The Draft Report covers the following topics:. The most important assertion of the CAG Draft Report is that the Government had the legal authority to auction the coal, but chose not to do so. Any losses as a result of coal allocations, then, between and are seen by the CAG as being the responsibility of the Government. The answer to this question turns on whether the Government could institute competitive bidding by an administrative decision under ccag current statute or whether it needed to amend the statute to do so.
The CAG devotes ten pages of its report to reviewing the legal basis for an auction, and comes to the following conclusion:. In fact, there was no legal impediment to introduction of transparent and objective process of competitive bidding for allocation of scaj blocks for captive mining as per the legal opinion of July of the Ministry of Law sfam Justices and this could have been done through an Administrative decision.
What is coal scam?
However, the Ministry of Coal went ahead for allocation of coal blocks through Reprt Committee and advertised in September for allocation of 38 coal blocks and continued with this process until Other parts of the report, however, suggest that while an administrative decision might be sufficient legal basis for instituting competitive bidding, the “legal footing” of competitive bidding would be improved if the statute were amended to specifically provide for it.
Quoting the Law Secretary in August The Screening Committee had been constituted by means of administrative guidelines. Since, under the current dispensation, the allocation of coal blocks is purely administrative in nature, it was felt that the process of auction through competitive bidding can also be done through such administrative arrangements.
In fact, this is the basis of our earlier legal advice.
This according to the administrative Ministry has been questioned from time to time for legal sanction. If provision is made for competitive bidding in the Act itself or by virtue of rules framed under the Act the bidding process would definitely placed on a higher level of legal footing.
So while cat CAG certainly makes the case that the Government had legal grounds on which to introduce competitive bidding into the coal allocation process, saying that there was “no legal impediment” to doing so perhaps overstates their case.
If the most important charge made by the CAG was that of the Government’s legal authority to auction the coal blocks, the one that drew the most attention was certainly the size of the “windfall gain” replrt to the allocatees. Note also that the figure stated as a windfall gain would in fact accrue to the allocatee over the life of the reserve, which would likely exceed years. Thus, rfport any reasonable discount rate, the Present value of the windfall gain will be dramatically smaller perhaps one tenth of the windfall gain stated in the CAG Report.
Repogt resulting list, a veritable Who’s Who of Indian coap, ensured that the topic of coal allocations would be one of the most written about stories of The CAG is at it again. The beneficiaries include some doal companies, as well as some public sector units, in industries such as power, steel and cement. The Income Tax Department was also roped in to look into the financial frauds and follow the money trail. However, JR Power had no expertise in thermal power, iron and steel, or cement, the key sectors for consumption of coal.
In this way, the rights for the use of the coal block ultimately passed on to KSK.
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Reacting to this, Jagathrakshakan admitted to getting a coal block, and said that, “It is true that we got a coal allocation but it was a sub-contract with Puducherry government and then we gave it away to KSK company. Now, we have got nothing to do with the allocation but if the government wants to take back the allocation it can do so. The letter was written on 5 February On the very next day, Prime Minister’s Office PMO sent a letter to the coal secretary on 6 Februaryrecommending allotment of coal blocks to the company.
Ltd, which received coal blocks illegally by means of inflating their financial statements and overriding the legal tender process. UPA partner Rashtriya Janata Dal ‘s leader Premchand Gupta’s sons’ company, new in the steel business applied for a coal block when Premchand Gupta was the Union minister for corporate affairs and secured it about a month after his tenure ended along with that of his government.
The company, which applied for a block on 12 Januaryand was awarded it on 17 Juneis sitting on reserves of The reserves it controls are more than the combined reserves held by much larger companies — Gujarat Ambuja and Lafarge.
However Mr Gupta maintains he had no involvement in IST Steel and denies influencing the coal-block allocation process. On 27 Februarytwo private companies got huge coal blocks. Both the blocks were in Orissa and while one was over mega metric tones, the other was over mega metric tones.
One of these blocks was awarded to Jindal. Naveen Jindal’s Jindal Steel and Power was the company which was allotted the Talcher coal field in Angul in Orissa inwell after the self-imposed cut off date by the Centre on allocation of coal blocks. The Opposition alleged that the Government violated all norms to give him coal fields. Naveen Jindal, however, denied any wrongdoing. In response to the Times of India story there was an uproar in Parliament, with the BJP charging the government with corruption and demanding a court-monitored probe into coal allocations:.
But, now the new coal scam is Rs It is a government of scams According to the Comptroller and Auditor General of India, this is a leak of the initial draft and the details being brought out were observations which are under discussion at a very preliminary stage.
At the end of Junecoal ministry decided to form an Inter-Ministerial Group IMGto decide on either de-allocation or forfeiting the Bank Guarantees BG of the companies that did not develop allotted coal blocks. Other IMG members include representatives from power, steel, departments of economic affairs, industrial policy and promotion, and law and justice.
As of 26 Septemberthe IMG has reviewed 31 coal blocks. Out of these, it has recommended de-allocation of 13 coal blocks and encashment of bank guarantees of 14 allottees. The coal ministry on Thursday decided to de-allocate 11 captive coal blocks including three mines of Jindal Steel and Power, besides forfeiting the bank guarantees of six firms and asking five to expressly furnish bank guarantees.
The ministry has been facing intense flak over alleged irregularities in allocation of coal blocks since and the Central Bureau of Investigation CBI is currently investigating the abnormalities and criminal conspiracy in their allotment. The agency has filed 14 FIRs and two preliminary enquiries so far in this connection. In this backdrop, an inter-ministerial group IMG of the coal ministry met on 24 October to consider the fate of 30 coal blocks, including those being investigated by the CBI.
All allottees had been issued show-cause notices and were asked to furnish their views to the IMG. The decisions have been taken after careful consideration, a top coal ministry official told The Indian Express.
Another coal-to-liquid block — North of Akrapal allocated to the Strategic Energy tech System Limited, which is a joint venture between the Tata group and South African firm Sasol has also been de-allocated.
The ministry is preparing to inform the companies impacted by the decision. As per the IMG’s recommendations steel maker SAIL is among the five companies to lose bank guarantees for delay in developing allotted blocks. Meanwhile, Jindal Steel and Power Ltd JSPL intends to appeal in court against the government decision to de-allocate the coal block allocated to it, a company source said.
A JSPL spokesperson repodt said the company sees “no reason” behind the de-allocation as environment clearance for the coal block in Chhattisgarh was given on Feb A large of allottees of these blocks were issued show cause notices by the IMG cosl show why they had failed to take the required action to develop these blocks and why action should not be taken against them. Following this, the Coal Ministry had asked the owners of these blocks to make a presentation before the IMG on achievement of milestones and reasons for delays.
During the presentation, a number of companies pointed to the continued unending delays in land acquisition, getting environmental clearances and regulatory hurdles for delays in development of the mines. The government had formed the IMG last year to review the progress of coal blocks allocated to firms for captive use and recommend action, including de-allocation.
The panel has members from other Ministries including Steel and Power. The Supreme Court is monitoring the Coalgate scam probe into coal block allocations since being conducted by CBI following three public interest litigation petitions alleging that rules were flouted in giving away the natural resources and favouring certain companies at a huge loss of crores to the national exchequer. Slamming the decision to de-allocate their coal blocks, Jindal Steel and Power and Monnet Ispat and Energy have blamed lack of government approvals and external factors like Naxal activities for not making enough progress in their mines.
The two companies, whose 4 blocks figure in the list of 11 to be de-allocated, said that they are being punished for no fault of theirs. The JSPL spokesperson said the company’s coal blocks are being de-allocated “despite best efforts made by the company and no fault on part of the company. He also accused the Coal Ministry of violating its own conditions clause 17 of General Condition of Allocationsaying that the caluse “clearly stipulates that any delay in transferring the land by a government company to the coal block allocatee can be claimed as grace period.
The spokesperson of Jindal Steel and Power JSPL said its employees, officials and contractors were assaulted or made hostage many times at the site and equipment were damaged. He added that many complaints and FIRs have been filed on these issues and state and central governments have been informed about it.
Talking about the to be de-allocated Ramchandi promotional block, he said JSPL’s application for prospecting licence is pending with Odisha government for more than three years and the state government has not yet “executed PL on one pretext or the other in spite of a number of reminders.
The Ramchandi block, which has estimated 1. On Urtan North block, the third to be de-allocated block jointly allocated with MonnetJSPL spokesperson said that its Coao Plan is pending for final approval from Coal Ministry for more than six months now.
The Mine Plan approval letter is pending for issuance with Ministry of Coal for more than six months,” the company said. Monnet, which is also a cozl in the block, also echoed the same. It the spokesperson said that grant of EC is in the “final stage” and the company is hopeful that it will be cleared by EAC in their “forthcoming meeting” to be held later this month.
For Monnet, Urtan North and Rajagamar Dipside blocks are supposed to be the captive raw material source for its over a million tonne steel plant in Chhattisgarh’s Raigarh, which is now in final stages of commissioning. The company said it has invested over Rs. The Urtan North block is also critical to JSPL’s plans as it was supposed to meet per cent of the coking coal needs of its already operational Raigarh steel plant in Chhattisgarh.
The company said has invested Rs. In Chapter 4 of the Final Report, the CAG continued its contention that the Government had the legal authority under the existing statute to auction coal by making an administrative decision, rather than needing to amend the statute itself. Pages 22—27 chronicle key correspondence between the Secretary Coalthe Minister of State Coalthe prime minister’s Office, and the Department of Legal Affairs from to