Quoting the Law Secretary in August 2006: there is no express statutory provision providing for the manner of allocating coal blocks, it is done through a mechanism of Inter-Ministerial Group called the Screening Committee ...
If the most important charge made by the CAG was that of the Government's legal authority to auction the coal blocks, the one that drew the most attention was certainly the size of the "windfall gain" accruing to the allocates.
[30] On 15 September 2012, an Inter Ministerial Group (IMG) headed by Zohra Chatterji (Additional Secretary in Coal Ministry) recommended cancellation of a block allotted to SKS Ispat and Power.
[33] Vijay Darda, a Congress MP, have been accused of direct and active involvement in the affairs of three companies JLD Yavatmal Energy, JAS Infrastructure & Power Ltd., AMR Iron & Steel Pvt.
Gupta, who belongs to the Rashtriya Janata Dal headed by Bihar leader Lalu Prasad Yadav, was the minister of state for corporate affairs in UPA-I when his party was a constituent of the Congress-led coalition with 21 seats in Lok Sabha.
Another coal-to-liquid block – North of Akrapal allocated to the Strategic Energy tech System Limited, which is a joint venture between the Tata group and South African firm Sasol has also been de-allocated.
The ministry has decided to de-allocate the Rajgamar Dipside (South of Pulakdih Nala) coal block jointly allotted to Monnet Ispat and Energy Ltd among others.
Meanwhile, Jindal Steel and Power Ltd (JSPL) intends to appeal in court against the government decision to de-allocate the coal block allocated to it, a company source said.
Those who were asked to make a presentation before the IMG included state-owned Steel Authority of India (SAIL), NTPC Ltd, JSPL, Abhijeet Infrastructure, Birla Corp and Rathi Udyog, Tata Power and Monnet Ispat and Energy Ltd. JSPL was specifically asked to make a presentation with regard to delay in production from its four coal blocks - Amarkunda Murgadangal in Jharkhand, Utkal B1 and Ramchandi in Odisha and Urtan North in Madhya Pradesh.
The government had formed the IMG last year to review the progress of coal blocks allocated to firms for captive use and recommend action, including de-allocation.
The Supreme Court is monitoring the Coalgate scam probe into coal block allocations since 1993 being conducted by CBI following three public interest litigation petitions alleging that rules were flouted in giving away the natural resources and favouring certain companies at a huge loss of crores to the national exchequer.
Slamming the decision to de-allocate their coal blocks, Jindal Steel and Power and Monnet Ispat and Energy have blamed lack of government approvals and external factors like Naxal activities for not making enough progress in their mines.
At the outset, we are shocked and surprised to hear the recommendation made by IMG (Inter-ministerial group), it seems that everybody in the policy making/monitoring wants to avoid a pragmatic decision in view of the media hype," Monnet Ispat spokesperson said in a statement.
"If IMG has recommended for de-allocation, then they are violating the published guidelines of MoC," the spokesperson said, adding that Monnet can start development of the block immediately as it needs "to acquire only 5 acre of land for making an entry."
According to the JSPL spokesperson, the company has made 4 attempts for carrying out exploration at Amarkonda Murgadangal block since April, 2009 but could not do it due to "large amount of extremist/Naxal activities" and "illegal mining" supported by extremists/anti-social elements.
"State government had further agreed to extend the validity of PL (prospective licence) by 2 years 4 months and 8 days under force majeure conditions on 5 June 2013 and we are in the process of starting our fifth attempt to carry out drilling operations in this block," he said.
The Ramchandi block, which has estimated 1.5 billion tonnes of coal reserves, was allocated for ambitious Coal-to-Liquid project in February, 2009 and JSPL had already announced investment Rs.
"Expert Appraisal Committee (EAC) of MoEF, GoI has already considered grant of EC and is mainly pending for submission of Mine Plan approval letter.
For Monnet, Urtan North and Rajagamar Dipside blocks are supposed to be the captive raw material source for its over a million tonne steel plant in Chhattisgarh's Raigarh, which is now in final stages of commissioning.
The Urtan North block is also critical to JSPL's plans as it was supposed to meet 10-12 per cent of the coking coal needs of its already operational Raigarh steel plant in Chhattisgarh.
West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan that were ruled by opposition parties, were strongly opposed to a switch over to the process of competitive bidding as they felt that it would increase the cost of coal, adversely impact value addition and development of industries in their areas and would dilute their prerogative in the selection of lessees.
[67] The CAG, Singh argued, had simply ignored the practical realities of policy implementation in their accusation that the Government did not move fast enough in transitioning to competitive bidding.
The observation of the CAG that the process of competitive bidding could have been introduced by amending the administrative instructions is based on the opinion expressed by the Department of Legal Affairs in July and August 2006.
In a meeting held in September, 2006, Secretary, Department of Legal Affairs categorically opined that having regard to the nature and scope of the relevant legislation, it would be most appropriate to achieve the objective through amendment to the Mines & Minerals (Development & Regulation) Act.[69]26.
The CAG has computed financial gains to private parties as being the difference between the average sale price and the production cost of CIL of the estimated extractable reserves of the allocated coal blocks.
Therefore, aggregating the purported financial gains to private parties merely on the basis of the average production costs and sale price of CIL could be highly misleading.
"There has been mounting evidence... for the last one year as to how major corporate groups like Jindals were able to garner huge blocks with millions of tonnes of coal, as was the case with shady companies linked with other politicians.
The Naveen Jindal Group had allegedly "misrepresented" facts and was shown favour by the Jharkhand Government which dropped other firms from its recommendation for allocation of coal blocks in the state in 2007, the CBI has said in its FIR filed before a court here in Coalgate.
"Enquiry further revealed that both M/s JSPL and M/s GSIPL misrepresented in its application/feed back form on the count of their preparedness in setting up their proposed EUP as well the previous allocation of coal blocks to their group companies," it said.
Missing files benefit three sets of people– the beneficiary companies (and individuals) who received coal block allocations; the screening committee (based on its deliberations) and the minister and his office (bureaucrats and officials).