Coal-Fired Political Minefields Dominate 2012

Bangalore: Coal fired a minefield of controversies in 2012, fuelled by CAG estimates of a huge 1.86 lakh crore loss for allocation of coal blocks to business houses without auction which served as fodder to the Opposition parties to target the government.

The blaze started from a leaked draft report of the Comptroller and Auditor General (CAG) that initially had a figure of 10.6 lakh crore loss resulting from the controversial allocation of coal blocks to about 100 companies without bidding.

While the final figure of the benefits that might have accrued to the private firms was 1.86 lakh crore, the political turmoil almost washed out the Monsoon Session of Parliament, the second worst since the 2009 general elections, causing a huge embarrassment to the government.

The Opposition onslaught was directed towards Prime Minister Manmohan Singh who held the coal portfolio between 2005 and 2009, the period of allocation of mines without auction, as pointed out by the government auditor.

The high-voltage drama could somehow cool after the media focus shifted to several other politically fertile issues like FDI in multi-brand retail and the attacks by civil society.

But, the government did bow to the pressure and announced cancelling licences of 24 mines and imposed penalties like deducting bank guarantees of many others.

These actions were recommended by an inter-ministerial group (IMG) which were accepted by the government which found itself on the back-foot.

The CBI was also roped in to probe into the coal blocks allocated under questionable circumstances.

Several big firms like JSPL, ArcelorMittal, GVK Power, JSW Steel, Bhushan Steel had to face penal action -- either cancellation of allotments to them or forfeiture/deduction of bank guarantee.

Congress MP and industrialist Naveen Jindal-led Jindal Steel and Power was also one of the companies embroiled in the controversy. Some other big names involved in the controversy included former minister Subodhkant Sahai, Premchand Gupta and Vijay Darda.

Another issue which dominated the business news throughout the year was the tussle between Coal India (CIL) and power companies over fuel supply.

Supported by the Power Ministry on the issue, the Prime Minister's Office intervened which led to both Coal and Power Ministries announcing to take the process of inking pacts forward. So far 33 out of 87 power companies have entered into fuel supply pacts with CIL.

While CIL, the country's near-monopoly coal miner was given a Presidential directive to commit assured fuel to power firms, a few independent directors on the Board of the listed company objected to the government diktat.

A prominent minority shareholder of UK - TCI, even dragged the company to the court on the issue.

The country continued to face coal shortage impacting the power supply. Against the revised target of 447 million tonnes (MT) CIL could produce 435 MT, necessitating imports.

Since imports turned out to be expensive, a new demand was made mainly by the private power producers - supported by Planning Commission Deputy Chairman Montek Singh Ahluwalia - to resort to what is known as 'price pooling'. It means averaging the sale price of domestic and imported fuel.

But it could result into gain for some and loss for others. The clash of interest was bound to happen and the lobbying for and against the price pooling simmers on.

Meanwhile Coal India, which accounts for over 80 per cent of the domestic production, continues to battle regulatory and other hurdles to enhance production. The world's largest miner also said it is unable to transport millions of tonnes of coal stockpiled at mines in want of railway connectivity.

It has set a production target for 464 MT for the current fiscal.

Another issue which caught media glare pertained to 265 miners getting trapped in coal mines in West Bengal and Jharkhand due to collapse of three transmission grids serving Northern, Eastern and North-Eastern regions in July.

The miners were rescued after several agonising hours in mines.

During the year, the government also contemplated to open up the sector for commercial mining.

Asked about the sector's performance during the year, Coal Minister Sriprakash Jaiswal said despite battling on several fronts, it fared well and would play a decisive role in the country's growth map.

“The coal sector registered an unprecedented growth in 2012, not witnessed in the last decade. Though faced with charges (of irregularities in allocation of coal blocks), the coal sector has progressed well,” Jaiswal said.

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