It is unlikely that anything concrete will emerge from the tussle over the Coal Blocks Allocation scam. Maybe, it is the mother of all scams. And it will remain so because big players are involved in it. The way CBI is dragging its feet over the much publicised and yet less effective investigation for so long is an eye opener. Corruption is part of the system called democracy. Corporate houses are not afraid of corruption charges and, bribes they make to extract ‘illegal’ concessions from the powers that be. It is as normal as anything else.
In an apparent U-turn the CBI today told a Delhi court that there was ‘prima facie enough material’ to proceed against some private parties and public servants in a Coal Blocks Allocation scam case in which industrialist Kumar Mangalam Birla and former Coal Secretary P C Parakh have been named as accused. What stands in the way of CBI to complete the investigation is more intriguing than what they are revealing in part from time to time.
India’s Supreme Court has quashed allocations of 214 out of 218 coal blocks, which were allocated since 1993. The four blocks spared were two allocations made to the Ultra Mega Power Projects, an allocation made to the Steel Authority of India Ltd, and an allocation made to the National Thermal Power Corporation. The judgement highlights the Illegality and arbitrariness in the allotment of coal blocks. The natural resources belonged to the country and not just to a few individuals. The allottees must pay an amount of Rs 295 per metric ton of coal extracted as an additional levy. The additional payment would have to be made by 31 December 2014. Coal extracted till 21 March 2015 will also attract the additional levy. The allottees had submitted to the court that huge investments of about Rs 2.87 lac crore had been made in 157 coal blocks, as on December 2012, while around Rs 4 lac crore were at stake in respect of end-use plants. Scrapping of the allocations results in loans of about Rs 2.5 lac crore, given by banks and financial institutions becoming non-performing assets. Coal India Ltd has been given ‘breathing time’ of six months to take over the blocks, and also to the allottees to manage their affairs on cancellation. The power sector faces 20,000 mw in limbo. Most developers raised debt with coal blocks as collateral. Some small companies are already defaulting on interest payments. The penalty of Rs 295 per ton of coal mined up to 2014-15 nets the Union Government of India Rs 10,000 crore. Operational mines will have to produce 267 metric tons of coal by end 31 March 2015. The estimated loss in terms of royalty, cess, direct and indirect taxes, and coal import is around Rs 4.4 lac crore. The exceptions to cancellation of allocations of coal mines by the government cover the ultra-mega power plants, such as the one at Sasan, and for coal blocks attached to the power and steel companies controlled by the union government. Tax payers will pay again, if the stress of confiscation and re-allocation is borne by the public sector banking system. As the Coking Coal Mines (Nationalisation) Act of 1972 is far from a pro-market legislation, the corporate lobby is likely to demand its ‘reform’ or dilution of existing laws.
With growth at any cost being the sole strategy of the Modi government private players will finally win the day. After all India’s judicial system will allow them time and space to get away with all irregularity and turn ‘illegal’ into ‘legal’.
Vol. 47, No. 21, Nov 30 - Dec 6, 2014