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Transcript of coal scam 2013
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THE COAL SCAMA STUDY!!
THE SCAMWHAT IT IS!
ESTIMATE
COMPARISON
OF SCALE
THEPROCESS THE PEOPLERESPONSIBLE
THE
GAINERS
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WHAT IS THE BASIC ISSUE?
Coal allocation scam is a political scandalconcerning the Indian government's allocationof the nation's coal deposits to Public Sector
Entities (PSEs) and private companies. In a draft report issued in March 2012, the
Comptroller and Auditor General of India(CAG) office accused the Government of Indiaof allocating coal blocks in an inefficientmanner during the period 2004-2009.
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FIRMS ELIGIBLE FOR A COAL
ALLOCATION
Historically, the economy of India could becharacterized as broadly socialist, with thegovernment directing large sectors of theeconomy through a series ofFive-year Plans.
In keeping with this centralized approach,between 1972 and 1976, India nationalized itscoal mining industry, with the state-ownedcompanies Coal India limited(CIL) andSingareni Collieries Company (SSCL) beingresponsible for coal production.
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This process culminated in the enactment of the CoalMines (Nationalisation) Amendment Act, 1976, whichterminated coal mining leases with private lease holders.
Even as it did so, however, Parliament recognized that thenationalized coal companies were unable to fully meetdemand, and provided for exceptions, allowing certaincompanies to hold coal leases:
1976. Captive mines owned by iron and steelcompanies.
1993. Captive mines owned by power generation
companies.2007: Captive mining for Coal gasification and liquid
faction.
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THE COAL ALLOCATION
PROCESS In July 1992, Ministry of Coal, issued the instructions for constitution of a
Screening Committee for screening proposals received for captive mining byprivate power generation companies.
The Committee was composed of government officials from the Ministry of
Coal, the Ministry of Railways, and the relevant state government.
A number of coal blocks, which were not in the production plan of CIL andSSCL, were identified in consultation with CIL/SSCL and a list of 143 coalblocks were prepared and placed on the website of the MoC for information ofpublic at large.
Companies could apply for an allocation from among these blocks. If they weresuccessful, they would receive the geological report that had been prepared bythe government, and the only payment required from the allocatee was toreimbur se the government f or their expenses in preparing the geological report.
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COAL ALLOCATION GUIDELINES
The guidelines for the Screening Committee suggest that preference be given to the Powerand Steel Sectors (and to large projects within those sectors).
They further suggest that in the case of competing applicants for a captive block, a further10 guidelines may be taken into consideration:
status (stage) level of progress and state of preparedness of the projects;
net worth of the applicant company (or in the case of a new SP/JV, the net worth of their
principals);production capacity as proposed in the application;
maximum recoverable reserve as proposed in the application;
date of commissioning of captive mine as proposed in the application;
date of completion of detailed exploration (in respect of unexplored blocks only) asproposed in the application;
technical experience (in terms of existing capacities in coal/lignite mining and specifiedend-use);
recommendation of the administrative ministry concerned;
recommendation of the state government concerned (i.e., where the captive block islocated);
track record and financial strength of the company.
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1.87 lakh Crore Rupees
Biggest scam in India by now
Report authenticated by
Comptroller and AuditorGeneral of India
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WHATITIS!What is the coal scam?A question many of you would have.
Simply put it is a corruption scandalwhere-in the Comptroller and AuditorGeneral of India (CAG) office has
accused the Government of India forproviding the nation's coal depositsto private and state-run entities in anirregular and arbitrary manner instead
of publicly auctioning them off to thehighest bidder (as is usually done forsuch entities), resulting in a loss ofapproximately 186,000 crore(US$33.67 billion) to the exchequer
during the period 2004-2009.
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To g e t a n i d e a o f i t ss c a l e l e t s s e e w h a t
this money c o u l d h a v e b o u g h t
:
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The CAG took into account average production cost per tonne of coal of all gradesproduced in open cast mines of CIL as well as sale price as reference value in order
to calculate the financial gain to allottees.
This delay meant that coal was allocated under the existing, opaque process givingprivate companies huge monetary gains.
Coal secretary had warned way back in 2004 about windfall gains to privatecompanies under existing scheme of allotment but PMO continued to delay process
of competitive bidding.
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CAG REPORTS VS.
GOVERNMENT RESPONSE
Pvt. firm gain Rs. 1.86 lakh
crore after blocks given by
nomination.
THE LOSS
Despite repeated advice from
Law ministry, competitive
bidding delayed.
THE
DELAY
After being advised toproceed with auctioning, Coal
Ministry wasted time.
THE
AUCTION
CAGs figure misleading. Of the 57 blocks
cited, only one operational.
Ministry took time to clarify for bidding,
MMDR Act needed changes.
Oppositions from stated like Chhattisgarh,
Rajasthan and Bengal caused delay.
CAGS REPORT GOVT. RESPONSE
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PRIVATE SECTOR Gains (Rs. Cr)
BIGGEST WINDFALL ALLOCATION
PSU Gains (Rs. Cr)
Strategic Energy Tech System Ltd.
Electro Steel Castings and Others
Jindal Steel and Power Ltd.
Bhushan Steel Ltd, Jai Balaji Ltd &
Rashmi Cements
Ram Swarup Lohh Udyog, Adhunik
Corp, Uttam Galva Steel
JSPL & Gagan Sponge
JSPL/MCL/PL/Jindal
Stainless/Shyam DRI
Tata Steel Ltd.
Chattisgarh Captive Coal Co Ltd.
CESC Ltd & JAS Infrastructure
33,060
26,320
21,226
15,967
15,633
12,767
10,419
7,161
7,023
6,851
NTPC
TNEB & MSMCL
JSEB & BSMDC
MMTC
WBPDCL
CMDC
MSEB & GSECL
JSMDCL
MPSMCL
35,024
26,584
18,648
18,628
17,358
16,498
15,335
11,988
9,947
Note: Based on prices at time of allocation
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WHO IS RESPONSIBLE?The Comptroller and Auditor General of India puts the Coal
Ministry and the government, particularly the PMOs office
during the period 2004-2009 as responsible for the
misallocation of coal blocks. The coal ministry at the time was
headed by the current Prime Minister Dr. Manmohan Singh,
whose clean image has now come under question.