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Monday, 17 Jun 2013
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Captive coal blocks produced more scams than coal

 

The Union Coal ministry, in June 2013, issued 23 more show-cause notices to Captive coal block allottees asking them to give reasons for delay in development of coal blocks allocated to them. These include public sector enterprise like NTPC and private companies like JSPL, GVK Power, Monnet Ispat etc.

 

Coal Allocattee_ProjectsToday

 

The Union Coal ministry has asked the companies to reply within 20 days. Failing to do so would result in de-allocation of coal blocks bagged by them. The Captive coal blocks which face de-allocation threat include NTPC’s Tallaipalli coal block in Chhattisgarh and JSPL’s Utkal-B1 coal block in Odisha.

 

According to the information released by the inter-ministerial group (IMG) of the total 195 coal blocks allocated to both public and private firms, only 30 mines had begun production. The IMG on Coal was constituted in June 2012, for the periodic review of the development of coal blocks and make recommendations on action to be taken, including de-allocation if required.

 

  Coal Blocks Allocated to Private Companies
 Sector
 No. of coal blocks  
 Geological Reserves 
(GR) in MT  
 Power
27 
4,974 
 Iron & Steel
61 
8,671 
 Cement
629 
 Small & Isolated
27 
 Coal to Liquid (CTL)
3,000 
 Total
99 
17,301 

In 2012, the Coal ministry issued show-cause notices to 58 coal block allottees and de-allocated more than 10 coal blocks including the Bhushan Steel’s New Patrapara block in Odisha. So far, the Ministry has de-allocated a total of 47 coal blocks mainly on account of lack of progress of development of the blocks.

 

The failure of the Coal India Ltd to produce enough coal to meet the growing demand from the Steel and Power sectors, in 1993, the Coal Mines (Nationalisation) Act, 1973 was amended for allocating Captive coal blocks to private companies engaged in production of iron and steel, power generation and washing of coal. The reform measure was also expected to bring in huge private investment into this sector.

 

However, failure of the allottees in commencing coal production within the scheduled time not only made the privatisation policy a non-starter but the ways and means adopted to allocate coal blocks to private companies came under the scanner of the Comptroller and Auditor General of India. In its report on ‘Allocation of Coal blocks and Augmentation of Coal Production’ released on August 17, 2012, the CAG accused the government of causing huge loss of around Rs 1.86 lakh crore to the national exchequer.

 

The Auditor General felt that the government should have followed the competitive bidding route for allocation of coal blocks. According to the CAG report, the discretionary allotment of coal blocks to private companies led to allegations of corruption against private companies like JSPL, which has been allotted 7 coal blocks with total geological reserves of 2341.04 million tonne.

Coal Production_ProjectsToday

The coal production figures clearly indicate the failure of the privatisation policy. As of April 2013, the coal ministry had allocated coal blocks with geological reserves of 50 billion tonne. Even after the de-allocation of 25 blocks, the privatised capacity of coal block stood at 44.23 billion tonne. As against this, the coal production from these sources stood at a meagre 36.8 million tonne in 2012-13, which is about 7 per cent of the total coal production of 557.5 MT.

 

Manufacturing Sector Developments

 

 
  • BPCL to expand its total refining capacity to over 40 million tonne by March 2017
  • Nalco is planning to invest Rs 4,570 crore to increase the capacity of the Orissa refinery from its existing 2.1 million tpa to 3.1 million tpa, by 2016
  • JK Paper is likely to commission an expansion project in Rayagada, Orissa, by August 2013
  • Six under-construction projects in Andhra Pradesh have received State Government support and subsidies as per the new Industrial investment policy for 2010-2015
  • Genext Steels has obtained environmental clearance for the proposed sponge iron project at Jadcerla in Mahaboobnagar district of Andhra Pradesh

 

Infrastructure Sector Developments

 

 
  • Sadbhav Engineering has been declared the successful bidder for the work of CC-42 for Delhi Metro rail project
  • Punjab Water Supply & Sewerage Division (PWSSD) has invited bids for water supply project in Ferozepur district of Punjab
  • Sagar Cements is laying a private railway line to improve its market reach and cut freight costs in Andhra Pradesh
  • The Cabinet Committee on Economic Affairs (CCEA) has delegated powers to the Ministry of Road Transport & Highways (MoRTH) to approve all road projects of upto Rs 500 crore irrespective of the mode of implementation
  • Maharashtra Government is planning to invest Rs 470 crore for a micro-irrigation scheme, to be implemented from 2013

 

Power Sector Developments

 

 
  • CLP India will invest around Rs 7,000 crore in its power sector across India
  • Orissa and Andhra Pradesh Government will jointly construct a 60 MW hydro-electric project across the Sileru river at Chitrakonda in Malkanagiri district of south Orissa
  • MAHAGENCO has proposed to set up four solar power parks under PPP framework with partial funding by Asian Development Bank (ADB) across Maharashtra
  • Tamil Nadu Newsprint and Papers (TNPL), has invited EoIs for solar power plant in Karur district of Tamil Nadu on BOO basis
  • Sona Power has acquired 1,200 acre to set up a 1,320 MW (2 x 660 MW) coal-based power project in Janjgir-Champa district of Chhattisgarh

 

Quote of the week:

 

Kalyan Banerjee_ProjectsToday

"The commencement of coal production only from 30 coal blocks out of total allocated 218 puts a question mark over the performance and efficiency of allocatee companies, especially private companies which have a major share in allocation."

 

Kalyan Banerjee,
Chairman of the Parliamentary Standing Committee on Coal

 

 
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