Coal
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  • 1. Lets Burn Coal!! ---The “Coalgate” Scam Presenters: Parnamoy Dutta (13) Malvik Majithia (24)
  • 2. Introduction:-  What this article is about?  De-allocation of coal mines. ○ e.g: Excess allocation to RIL.  Production did not meet expectations.  Allocated at throwaway prices.  Who are involved?  Ministry of Coal.  Ministry of Finance.  Power and Steel companies.  Prime Minister’s Office.
  • 3. Coal and the Indian Economy:-  Accounts for 67% of total energy consumption.  Meets 52% of primary commercial energy.  66% of power generation is coal based.  Mining Sector contributes 2.25% to the GDP.  Industry Sector which is the main consumer contributes to 14% of the GDP.
  • 4. Some more numbers:- 58 coal blocks stuck due to external factors 23 coal blocks de- allocated till December 2011 18 blocks expected to start production soon 9 coal mines in full production 218 coal blocks allotted so far
  • 5. The Scam:-  Companies with no prior experience in mining were allotted coal blocks.  Allotment based on recommendations from various high profile individuals.  17 companies who didn’t show up at the before screening committee were allotted coal blocks.  Screening committee was made most powerful within 5 months of UPA 1.  Windfall gains to private players.  “No-bid” process.
  • 6. Why Preferential Allotment:-  Defensive Government Strategy due to:  Concerns of State Governments.  Need to amend associated acts.  Gestation period of 3-7 years.  To keep the prices low.  Corruption.  For interests of CIL.
  • 7. Why is the government under scanner?  High cost of merchant power.  Low production of coal.  Gestation period of most mines are over.  Even after repeated reports of audit committees auctioning was not implemented.
  • 8. Government actions:-  Asked for show-cause notices from operators of 58 coal blocks  provide details of investments  provide progress on projects  provide details of mine development  De-allocation for those who  Have not seriously followed up for clearances  Have not invested in setting up end plants  CBI will investigate allocations done in a “wrongful manner”.  IMG’s recommendation after investigation.
  • 9. Pros • Freeing of resources for judicious use • Better pricing of end products • Incentive to NPAs Cons • Diverse effect on Banking sector • Conflicts with Environment Ministry • Could lead to an oligopoly