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'DNA' exclusive: Private firms got the best coal blocks

Coal India got underground mines, while lucrative open-cast mines were allocated to the pvt sector.

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The CAG’s report on the coal block allocations that has put Prime Minister Manmohan Singh in the dock, notes that “underground mines” are “mostly loss-making” as per available data. And documents available with DNA show that the bulk of these “loss-making mines” were quietly allocated to the government PSU Coal India Ltd (CIL) while all the lucrative open-cast mines went to the private players.

Not only were the coal blocks allocated to CIL “loss-making”, they were also “unexplored”, which means that the mines did not even have proven reserves. So, while the coal ministry, working under the Prime Minister’s Office (PMO) for several years, gave away coal mines estimated by the CAG to be around Rs 1.86 lakh crore to private players, the ones that were given to CIL could be virtually worthless.

In 2008, CIL had asked for 138 mines from the government to fulfil the national coal requirement. However, their request was kept pending while private players were getting their lucrative share on an ad hoc basis. Suddenly, in May this year, the Coal Ministry, probably worried about the CAG’s on-going audit, cleared 116 coal blocks for CIL.

A cursory glance at the allocations reveals that 81 of the 116 coal blocks, that is nearly 70%, are underground blocks, which are prohibitively expensive to mine. To add to CIL’s woes, 98 of them are “unexplored.” That means, no one knows how much coal there is in these blocks and some of them could be useless.

Compare this with what the private sector companies, currently facing a CBI probe, got from the UPA government. Documents show that 144 out of the 165 coal blocks given to the private sector since 2004 are all “explored” mines, with proven coal reserves. So, while the best and the most lucrative ones were given away by the UPA government under Manmohan Singh, the duds were given to CIL.

“An underground mine takes double the time required to start mining. The investment required for developing an underground mine is almost ten-fold when compared to an open-cast mine,” a senior CIL official told DNA requesting anonymity.

In sharp contrast, an “explored” coal field has proven reserves, minimising the chances of incurring losses. For CIL, stuck with “unexplored” and underground mines, this is a double whammy. Not only will they have to “explore” the mines at considerable cost, they could turn out to be have very low reserves in the end. This means the investment made by CIL to just find out if the mine has any coal could prove to be a fruitless drain of hard cash. Top sources in the coal ministry told DNA that the private companies had lobbied hard to get the lucrative mines with proven reserves, while CIL was saddled with the worthless ones.

Ironically, Union coal minister Sriprakash Jaiswal tried to defend the UPA government by claiming that CIL had not been able to produce enough coal. But the fact is, with CIL saddled with such worthless mines, they had no choice. At the same time, many of the private players who managed to get the lucrative mines have also failed to produce any coal since the allocations were made. But Jaiswal has maintained a stoic silence on this anomaly ever since the coal scam surfaced.

The BJP’s Lok Sabha MP, Hansraj Gangaram Ahir, who was the first one to raise the issue, says that the “the government has deliberately allocated low quality coal fields to CIL. The government has made sure that its production becomes stagnant. It is the government’s conspiracy to kill a PSU and help private companies earn more profits.” It is Ahir’s consistent complaints that formed the basis of the CBI’s FIRs into the coal scam.

 

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