Ashish Joshi
By now it is clear, even to its staunchest critics, that this current UPA government is the most corrupt since independence. The list of scams that have come to light since it came to power is as long as a giraffe’s neck. In fact the sums of money laundered since its inauguration in 2004 would easily rival the GDP of a few African nations.
The amounts involved in two of the biggest recent scams—the 2G spectrum scam and the coal gate scam-are a statistician’s delight. The former was pegged at 1.76 lakh crore rupees while the latter resulted in a loss to the exchequer the humongous sum of 1.86 lakh crore rupees.
The latter is the more serious of the two; in fact on May 29 this year the Prime Minister Dr. Manmohan Singh, who held the coal portfolio from November 2006 to May 2009, offered to resign if found guilty of any wrongdoing in the coal mining scam that has now become a millstone round his neck.
Now that the CBI has been told to investigate all aspects of the case, they have made it clear that they will not probe Prime Minister Manmohan Singh’s role in the alleged irregularities in the allocation of coal blocks between 2006 and 2009. The CBI would concentrate its efforts in the misuse of allocation of coal blocks, misuse of coal blocks by private companies and tabulate losses due to any wrongdoing during the auction process. It would investigate the role of all private companies, ministers, bureaucrats and officials and target the screening committee which recommended the names. It would also pay particular attention to 156 companies and 65 coal blocks.
So, what exactly is the coal gate scam that has the Opposition clamouring for the PM’s head? Is the furore in the media justified? Perhaps no other scam has received the kind of media attention than the coal mining scam, in which the Comptroller and Auditor General of India (CAG) charged the government of giving away coal deposits to private players in an arbitrary manner instead of following protocol and publicly auctioning them to the highest bidder; the resulting loss to the exchequer totalled 1.86 lakh crore rupees from 2004 to 2009. The government now finds itself in a fix as it cannot wish away the fact that after being allotted the coal fields at throwaway prices, quite a few of these private firms sold their companies making huge profits in the process; others decided to sell coal in the open market, making a mockery of their terms of contract. The companies that benefited the most through the coal mine allocation include such major power producers as Reliance Energy and Tata Power. Reliance Energy made a low bid on electricity prices for the ultra mega power projects (UMPP) in Jharkhand and Madhya Pradesh; its rationale was that captive coal would be theirs for the taking at a low cost. If coal is sold at the prevailing market rate, by the same token the power producers have a right to increase their electricity prices. But after suffering the worst blackout in history, will there be any buyer for more expensive electricity? As things stand, the state government-run electricity distribution boards hardly show any profit, as they are unable to pay power producers on time, being neck deep in debt.
There is however more to the scam than meets the eye. It seems that here mines were conveniently given to end-users for their captive requirements. This is very clearly brought out in the CAG’s report, which shows mining happening in only 28 out of the 86 captive coal blocks (private plus public) that were scheduled to take up production during the five-year-plan period ended 2011-12. The produce was barely half of what was required from these blocks.
Viewed from this angle, coal gate is a more pernicious scam compared with the first-come-first-serve allocation of the 2G spectrum case. In the latter case, there was no transparent auction process through which the mobile operators who were bidding got their licences, but the advantage was that at least new mobile services saw the light of day. The exchequer might have incurred huge losses but the consumer benefited from reduced call charges as several new players made their entry. Coalgate, by contrast, offered little hope of increasing the country’s coal output or ensuring nonstop fuel supplies to power plants. The rationale behind allowing captive mining and allocation of blocks – even if it meant bypassing auctions –was to increase production in the short term. Another aspect here was the fact that commercial coal mining in India is usually reserved for the public sector. To allow private commercial mining would have meant tweaking the Coal Mines (Nationalisation) Act, something of a third rail, so the captive allocation route was considered as a practical alternative. It is the screening committee that allocates coal blocks; this is an inter-ministerial inter-governmental body which is chaired by the coal secretary.
As if the coal scam controversy was not enough, there is even worse news for the beleaguered scam-ridden UPA government regarding the Delhi airport modernisation project. CAG alluded in its report on the Delhi airport modernisation project that the government had given out prime land that will fetch Rs. 1.63 lakh crore to its private sector partner, Dial. A report in one of the leading dailies mentioned that the CAG report had made it clear that the company had got 4,799.09 acres of land on a Rs. 100 annual lease rent for 60 years for an equity contribution of only Rs. 1,813 crore. And the operations and management deal signed between the Airports Authority of India and Dial allowed the company to utilise 5 per cent of the land for commercial exploitation which works out to nearly hundred crore rupees per acre!
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