8/26/2012 10:12:00 PM

Stateside view of coal block allotment

Ashutosh Bhardwaj Posted online: Fri Aug 24 2012, 00:01 hrs

Raipur : On January 13, 2006, six coal blocks of BJP-ruled Chhattisgarh were allotted to various companies. The same day, four more blocks, in Orissa and Jharkhand, were allotted to companies that included some with a Chhattisgarh connection.

While the BJP has blamed the UPA for allocation of coal blocks, the Raman Singh government not only wrote letters opposing auctions but also pitched in for some companies. Of the 57 coal blocks given to private companies and now under the CAG scanner, 13 are in Chhattisgarh and several of these 13 were allocated to companies that had no industrial base in the state and are yet to begin production.

State audit

Months before the current “Coalgate” controversy, the Chhattisgarh accountant general (who works under the CAG) had termed Raman Singh, who also held the mining portfolio, guilty for allocating some coal blocks at throwaway price to a company, causing the state a loss of Rs 1,052 crore. The allocations mentioned in the state auditor’s report, which was tabled in the Assembly in April, were not covered under the current CAG report that deals only with blocks allocated to private companies through a Central screening committee.

The company that was allotted the blocks mentioned by the accountant general was SMS Infrastructure Ltd, belonging to Nagpur-based BJP Rajya Sabha MP Ajay S Sancheti, close to party president Nitin Gadkari.

The report said the Centre allocated two coal blocks in Bhatgaon-II and Bhatgaon-II Extension to the Chhattisgarh Mineral Development Corporation in July 2007. The corporation invited tenders for commercial use but only one company was considered technically eligible for Bhatgaon–II.

According to the report, “While the tender price for mining in Bhatgaon-II was Rs 552 per metric tonne, at Bhatgaon-II Extension it was Rs 129.60 per metric tonne. Though the price quoted for Bhatgaon-II Extension was abnormally low, the corporation accepted it…both blocks were situated nearby and had same quality of coal… in fact, coal in Bhatgaon-II Extension is rare and of high value.”

It added that “instead of accepting the price quoted by the single applicant, the corporation should have either invited fresh tenders or postponed the date of opening tenders.” Taking note of the price quoted, the report said allocating mining rights in the Extension on a 32-year lease caused a loss of Rs 1,052.20 crore.

Raman Singh was widely slammed by his own party colleagues following the accountant general’s report. Raipur MP Ramesh Bais said: “SMS Infrastructure has no plant in Chhattisgarh. If he was favoured considering his proximity to top BJP leaders, then we too should be allotted such blocks.”

And BJP vice-president Karuna Shukla said: “Both power and mining are departments with the CM. The accountant general is a constitutional post and its findings cannot be trashed.”

The CAG, while computing the loss during allocation of coal blocks, did not include government companies and focused on private ones. Bhatgaon is an instance of a state PSU’s involvement in awarding favours selectively.

SMS Infrastructure, or for that matter any of the around two dozen companies allotted the 13 coal blocks mentioned in the CAG report, was yet to begin production till the latter report was finalised. Lakhs of metric tonnes of coal reserves are lying unused.

Even the allocations covered by the CAG report could not have been possible without the recommendation of the state government. It’s the state government that informed the screening committee about the status of the end use of the project.

CAG report

NAVBHARAT COAL FELDS LTD. It was among the companies allotted Madanpur North block on January 13 for a sponge iron plant, even though it had no such plant in the state. Such a plant, however, is in the name of a group company, Navbharat Fuse Pvt Ltd, in Dantewada. Soon after the allocation, Navbharat Coal Fields sold 74 per cent of its shares to Solar Explosive Ltd, Nagpur.

The company made a presentation to a screening committee at the Centre; the Chhattisgarh chief secretary was an invitee. None of them seems to have disclosed that the company did not have a sponge iron unit. “The government either concealed the crucial information about not having the required plant, or misled the screening committee at several instances to favour private miners. They violate mining and environment rules but the government takes no action,” says Bilaspur High Court advocate Sudip Srivastava, a campaigner in the region against the mining lobby.

One of  Navbharat’s promoters is V K Singh, whose wife Neena Singh had contested an Assembly election on a BJP ticket. Navbharat is among the largest selling newspapers of Chhattisgarh.’

Navbharat Power also got a coal block each in Rampia Dip Side and Rampia in Orrisa. CAG noted that of the 108 applications for these two only two companies were listed for making presentations. Eventually, six including Navbharat were chosen for both blocks.

PRASKAH INDUSTRIES. On February 6, 2008, it was allotted a coal block in Fatehpur. The company had an existing block in Chotiya, which was raided by CBI after it was found selling coal in the open market. It had a plant producing 3 lakh tonnes sponge iron per annum. It needed a maximum 5 lakh tonnes but the probe found it was mining 9-10 lakh tonnes and selling the rest. The company apparently did not disclose this before the screening committee and neither did the Chhattisgarh government. Of the 69 applications received for the Fatehpur block, only 36 were listed for making a presentation. Finally, only Prakash Industries and SKS Ispat and Power Ltd were allotted a block.

Both are considered close to the BJP. Prakash Industries has been allotted other blocks in the state.

The CAG has noted the absence of any records that formed the basis for evaluation or selection of a company.