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Power generation companies with coal blocks under scanner over loans

Loans availed by private power companies with captive coal mines have come under lens. The finance ministry has asked the coal and power ministries about details on loans to private power companies owning coal blocks and their recovery process.

This was triggered by a letter from Hansraj Ahir, Member of Parliament, to finance ministry saying there are irregularities in Rs 49,000 crore worth loans sanctioned by the Power Finance Corporation (PFC) to private companies.

The department of financial services has sought comments on Ahir's allegations from the ministries of coal and power and the Indian Banks' Association.

While the coal ministry has declined comments, the power ministry is yet to respond, a senior government official said. The official said the letter was part of a routine process as per which complaints and queries are forwarded to the concerned ministries for comments and action.

"We receive complaints regularly. We are looking into it and will do the needful, if required," the government official said. In its letter, Ahir alleged that many private companies inflated their balance sheets to avail loans above their eligibility.

PFC has given loans of Rs 49,000 crore to these companies, which have landed in trouble with the acceptance of the government that the coal blocks were allotted wrongly, he said. "The managements of the banks and also the management of the PFC had played a major role in the disbursement of the loan to these power companies," Ahir said.

"If the government delays and shows apathy in recovery of the loans it might give birth to a new scandal in the county. I think the issue is a major one and there is need to look into the matter and take action accordingly," he added. The CBI is looking into irregularities in coal block allotments.

It had in 2012 booked companies like Green Infrastructure and Kamal Sponge & Steel Ltd for false presentation of net worth and other information to get coal blocks. Of the 218 captive coal blocks allocated so far, about 130 are with steel, pig iron and cement companies and the balance are owned by power firms. Eighty of these captive blocks have been de-allocated and most cases are pending in high courts.

Source: The Economic Times