The Telegraph
Tuesday , February 25 , 2014
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Verdict time for coal

Mumbai, Feb. 24: The government is due to review on Tuesday its allocation of 10 coal blocks that were assigned to companies belonging to large industrial houses, including Tata Steel, Hindalco, Essar Power and JSW Steel.

Seven of the 10 coal blocks are in Jharkhand.

The inter-ministerial group will review the coal block allocations less than a month after the government scrapped 24 coal block allocations where work hadn’t begun because the allottees had failed to secure basic environment and forest clearances.

This is the second review of coal block allocations that became embroiled in controversy ever since the Comptroller and Auditor General (CAG) submitted reports to Parliament in August 2012 that questioned the government’s decision to allot 57 coal blocks to 75 cherry-picked private companies between May 2005 and July 2009, leading to a presumptive loss of Rs 1.86 lakh crore.

Dubbed Coalgate, it became the country’s biggest scam as it trumped the presumptive loss estimate in the 2G spectrum scandal of January 2008 by about Rs 9,000 crore.

The companies were under fire for failing to start mining operations there. In there defence, the companies said they had been unable to secure environment clearances and other approvals before they could begin operations.

Earlier, the CBI had launched a probe into the process of coal block allocated between 1993 and 2010.

There are a few big-ticket coal block allocations in the current review. They include the Mahan coal block in Madhya Pradesh that was farmed out to the Birla-owned Hindalco and the Ruias-owned Essar Power. The Ganeshpur coal block in Jharkhand that was awarded to Tata Steel is also under the scanner.

Among these, the Mahan coal block has just received stage-II forest clearance and its linked end-use projects are complete. Tata Steel-Adhunik, JSW Steel and Usha Martin also have existing or nearly complete end-use plants.

Experts believe there is a low probability of de-allocation of these coal blocks.

“Among the 10 blocks scheduled for the next review, the key ones have made substantial progress in their approvals and/or end-use projects. This reduces the risk of de-allocation in our view. Neverthless, we do not assume commencement of any new captive block,” said Edelweiss Securities analysts Prasad Baji, Navin Sahadeo and Salvin Shah in a report.

India has the world’s second largest coal reserves estimated at 285.86 billion tonnes.

In terms of “recoverable reserves”, it ranks fourth in the world behind the US, Russia and China with 101 billion tonnes, just over 10 per cent of the world total.