Coal news and updates

In its efforts to bring reforms to the coal sector, the UPA government not only failed but also ended up sullying its own image in allocation of coal blocks, which has cost two of its key ministers their jobs.

Executing coal sector reforms has remained a grey area of the Manmohan Singh government, which faced a gruelling time in the last two Parliament sessions following a CAG report which criticised the Centre for distributing captive coal blocks, 57 of them to private companies, which the audit watchdog said cost the exchequer Rs 1.86 lakh crore.

A defensive government ordered a CBI probe and ever since the agency has filed 14 FIRs and two Preliminary Enquiries and recently a chargesheet as well.

The controversy generated from the CAG report and subsequent inquiry also engulfed the Prime Minister’s Office, whose former officials have been reportedly questioned by the CBI for their alleged complicity in allocation of coal blocks.

Industrialists like Naveen Jindal, Aditya Birla and Vijay Darda are learnt to be under the CBI scanner for allegedly manipulating their way into securing coal blocks for their respective companies. The government understandably failed to defend itself in the Supreme Court when the Attorney General conceded that “things could have been handled in a different way.”

Realising that the it has erred in distributing the mines through an empowered inter-ministerial committee between 2006-09 (the erstwhile Screening Committee), the government in 2010 amended a mining law to introduce auctioning process. While it was too late, the auction process is yet to take off.

While proscribing commercial coal mining, the government leaned heavily on Coal India (CIL) to bail the country out of fuel shortage, but given the inefficient mining policies, huge evacuation bottlenecks and tepid growth in output, the PSU could not deliver fully on the entrusted mission.

Adding to the woes, in 2011, the Union environment ministry imposed the system of go and no-go, added the woes of power generation companies. Almost none of the crucial hurdles could be resolved within the term of the current regime. Desperate to galvanise CIL into action, the government in July 2013 imposed a Presidential directive on the state-run company, mandating it to sign fuel supply agreements to provide fuel to 78,000 MW capacity amounting to 63 MT of coal.

Considering that the company has pending Letters of Assurance for about 30,000 MW and if these projects are also commissioned then CIL would have negative coal balance as per the available demand-supply estimates, according to a IMG meeting details held in December 2013.

Further, there are 479 pending applications demanding 197 MT of fuel from the non-core sector for their captive power plants totaling to 39,000 MW, which CIL is unable to consider due to paucity of fuel. So while state-run CIL could not deliver  much, enlisting private participation through captive blocks also got mired in controversies.

While endorsing the popular contention that the coal sector needs a regulator, the ministry got the Union Cabinet’s approval to set up a watchdog, but refused to confer it pricing powers or any say in allocation or de-allocation process.

Unable to push through the coal regulatory bill in its last leg, the government intended to set up a regulator through an ordinance, but that plan seems have fallen through.

The inept handling of the performance-related pay of nearly 18,000 executives of CIL, due since 2007, has resulted in these officers going on a nation wide strike crippling coal despatch services.

The strike is a fallout of a long a silent tug-of-war between the coal ministry and the department of public enterprises. The much-touted restructuring of CIL also failed as the coal ministry seemed to be a divided house on it.

The UPA government bowed to the pressure from CIL’s trade unions and shelved plans to execute a follow-on-public offer. It had to plug its revenue gap by ensuring a hefty special dividend from CIL. After intense criticism on coal block allocations, the coal ministry set up an inter-ministerial group to initiate punitive measures against erring holders idling on their captive mines. The panel has recently canceled 31out of 60 mines an more de-allocations are expected in the near future.

 

 

Source: http://indianexpress.com/