Most of the 57 firms named in the CAG report are little known. An examination of the data available with the Registrar of Companies raises grave questions about the logic behind the allocation of coal blocks, as many of the allottees either have no prior experience in mining, have questionable track records or their financials are too weak to allow them to even buy basic mining equipment. Take, for instance, Vini Iron & Steel Udyog. It was incorporated in 2004 for Rs 18,95,000. In 2005, it decided to develop a 0.5 MTPA integrated steel plant at Chandil in Jharkhand. In January 2007, its founder Vaibhav Tulsyan applied for coal blocks, but the project never took off due to Naxal problems. “In May 2008, Vijay Joshi approached us to buy the company,” says Tulsyan. “We transferred all our shares for Rs 4.36 crore.” In November 2008, Vini Iron was allotted the Rajhara North coal block in Jharkhand. Joshi is now being probed for links with former Jharkhand chief minister Madhu Koda. Companies such as JLD Yavatmal Energy was set up with paid-up capital of Rs 2.85 crore. Interestingly, JLD was originally formed to generate power using coal from the Yavatmal blocks in Maharashtra, but it was allotted the Fatehpur East Block in Chhatisgarh instead. RKM Powergen, Vandana Vidyut, Visa Power and Green Infrastructure (now Athena Infraprojects) are co-owners of the block. JLD has no website, but shares two directors with Jayaswal Neco Industries (JNIL), whose owners are related to Manoj Jayaswal, head of Abhijeet Infrastructure. Both companies are now being probed by the CBI. “JLD Yavatmal Energy was a special purpose vehicle formed by Lokmat Newspapers, Abhijeet Infrastructure and Infrastructure Development Finance Company. JNIL is an independent entity, and it is not related to JLD Yavatmal Energy,” says Jayaswal Neco in an email response. Mednirai Coal Mining Co. was established in 2009 by Kolkata-based Kohinoor Steel and Rungta Mines after being awarded the Mednirai block in Jharkhand. The firm, which now owns 29 MT of extractable reserves (CAG estimate), was set up with an equity capital of just Rs 1 lakh. Rungta Mines has been hauled up many times for violating forest norms and mining in excess of the approved limit. Neither of the companies has responded to BW’s emails. There is also Jindal Photo (JPL), part of the Delhi-based B.C. Jindal Group. It specialises in manufacturing photographic and allied products — a sector that has nothing to with mining. Yet in January 2008, JPL was able to form a joint venture with Tata Power and Monnet Ispat and become part owner of the Mandakini-A coal block in Orissa. The company, too, did not respond to BW’s email questionnaire. (This story was published in Businessworld Issue Dated 17-09-2012)
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Delay in core projects completion have led to cost overruns of Rs 52,445 crore, Parliament was informed on 7 September' 2012. "As per the...report for the month of May 2012, the cost overrun was Rs 52,445 crore for the combined delayed projects of power (28), railways (36) and road transport and highways(84) sectors," the Minister of State (Independent Charge) for Statistics and Programme Implementation Srikant Kumar Jena said in a written reply to Rajya Sabha today. Jena said the ministry monitors the implementation status of on-going central sector projects costing Rs 150 crore and above on the basis of information supplied by project implementing agencies. The ministry releases a flash report every month on the implementation of infrastructure projects, he said. The government has initiated steps for timely completion of projects. This includes rigorous project appraisal and two stage approval procedure, prioritisation of projects, setting-up on-line computerised monitoring system and higher weightage to project implementation by PSUs. Standing committees are set up in various ministries for fixation of responsibility for time and cost overruns. On projects in Gujarat, he said, 13 ongoing central sector projects each costing Rs 150 crore and above were approved during last three years. The total original cost of these projects is Rs 26,368.82 crore and no cost overrun have been reported by the project implementing agencies in these projects. Jena said only one project--Kakrapar Atomic Power Project 3 and 4-- has reported delay of 11 months due to late receipt of financial sanction. (PTI)
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State miner Coal India on 7 August agreed to pay penalties for failing to provide sufficient supplies to new power projects that range from 1.5 to 40 per cent of a shortfall, depending on the level of default.It also agreed to pool the prices of imported coal with domestic supplies but said a final decision on this issue would be taken by the Central Electricity Authority. Such a pricing system would work only if all domestic consumers are willing to accept the resulting higher price, the company said.The Coal India board agreed to pay a 1.5 per cent penalty if its supplies amount to 65 to 80 per cent of the contracted volume and 5 per cent if they reach 60 to 65 per cent, its chairman told reporters after the board meeting.Penalties would rise to 10 per cent for 55 to 60 per cent, 20 per cent for 50 to 55 per cent and a maximum of 40 per cent for supplies of less than 50 per cent of contracted volumes."We have no objection to pooling of prices if it is acceptable to all stakeholders," Coal India Chairman S Narsing Rao told reporters after a board meeting.The move to fix penalties follows the company's agreement last week to supply a minimum of 80 per cent of the coal needed for new power projects, bowing to a condition set by the government, and paves the way for it to sign a fuel supply pact for 48 projects.Coal India had stipulated that it may use a mix of up to 15 per cent imported coal versus 65 per cent domestic. (Read: Coal India May Turn Importer)Coal India, the world's largest coal miner, produces nearly 80 per cent of the country's domestic coal supply of about 550 million tonnes but has struggled to increase local supplies for years because of failure to get swift environmental and regulatory approval and inadequate railway infrastructure.The government on April 3 had issued a Presidential directive to the Maharatna PSU to sign fuel supply agreements (FSAs) with the power producers assuring them of at least 80 per cent of the committed coal delivery in face of strong protest from independent directors on the Coal India board.The directive came in the wake of Coal India failing to meet the deadline of March 31, set by the Prime Minister's Office for CIL to enter into FSAs with power producers for minimum assured supply.However, even a Presidential directive was unlikely to relieve domestic coal shortages in the near-term, as was pointed out by ratings agency Fitch on April 4. And in order to meet its cupply obligations, Coal India decided to turn an importer of coal.This, despite the presidential directive, Coal India missed its deadline for signing the fuel supply agreements (FSA) with power companies. The miner had initially set a negligible penalty of 0.01 per cent (on the basic value of the shortfall amount) for itself, against 10 per cent that was originally proposed. The utilities, meanwhile, had asked for 10 to 20 per cent.Why did CIL get to decide its own penalty? (Read: Crime & Punishment ) The government, not CIL, should have decided it. To meet fulfil the 20,000-MW FSA commitment, CIL needs to ramp up production by 70 million tonnes. Failing to supply the entire quantity would hit CIL's revenues by less than Rs 1 crore, say estimates.The government of course needs CIL to supply coal at low rates to power companies. But, who would have been the loser if the coal miner were to pay a much higher penalty? It's the government, which holds 90 per cent stake in CIL.Specified Penalties"It's not very ominous. Obviously, it's more than they initially wanted, but we should also factor in that they are allowed to import coal to make up shortfall," said Murtuza Arsiwalla, a sector analyst with Kotak Securities.CIL typically puts a 10 per cent penalty clause in its fuel supply pacts with customers.It prices domestic coal 45 to 70 percent below international prices, in part to keep costs low for power companies. Pooling prices would allow the cost of more expensive imports to be distributed to more customers.Coal India plans to import 20 million tonnes in the current fiscal year ending March 2013 and 30 million tonnes in 2013/14, Rao said.Initial imports will be done through state agencies State Trading Corp and MMTC, he said.Ahead of the announcement, shares in Coal India, the country's fourth-largest company by market value at $39 billion, closed 0.3 percent higher in a firm Mumbai market.
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Amid furore over coal blocks allocation, the government will place its views before Parliament's Public Accounts Committee (PAC) by September 14 on the observations made by CAG. "The Coal Ministry will submit its comments to the PAC on CAG's observations on coal blocks allocations by September 14," a top Coal Ministry official told PTI. The PAC, chaired by BJP leader Murli Manohar Joshi has decided to examine the government auditor's report on coal block allocations, along with three other latest reports of the official auditor CAG. The Ministry is likely to contend before the Parliamentary panel that the estimates by the government auditor should not have been done in the manner it was made. The Comptroller and Auditor General in its recent report has estimated undue benefits to the tune of Rs 1.86 lakh crore to private players on account of coal blocks allocation to them without resorting to auction. With Congress and BJP locking horns over CAG report on coal inside Parliament, its ripples are likely to be felt in the meetings of the PAC when the issue is taken up for scrutiny.(PTI)
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India has no immediate plan to raise domestic fuel prices, Oil Minister S. Jaipal Reddy said on 7 September' 2012, adding that it was now up to the cabinet to decide on the thorny issue of reducing hefty subsidies on diesel, LPG and kerosene. The oil ministry and finance ministry have been pitching hard for a rise in fuel prices, since the subsidies weigh heavily on India's fiscal deficit at a time of slowing growth.(Reuters)
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Petrol in India costs more than it does in the US as well as neighbouring Pakistan and Sri Lanka, but is cheaper than in Europe. Diesel rates on the other hand are the cheapest in India. Petrol in the national capital costs Rs 68.46 per litre as compared to Rs 53.32 a litre in Pakistan, Rs 61.56 in Sri Lanka and Rs 62.25 in Bangladesh. Nepal, which imports all of its fuel from India, sells petrol at Rs 74.77 per litre, Minister of State for Petroleum and Natural Gas R P N Singh said in a written reply to a question in the Lok Sabha today. Petrol in US costs Rs 50.44 per litre. But in Europe, the fuel is much costlier - Rs 105.10 in France, Rs 111.03 in Germany, Rs 114.42 in United Kingdom and Rs 119.69 per litre in Italy. On the other hand, diesel price of Rs 41.32 a litre in the national capital is lower than Rs 59.56 in Pakistan, Rs 41.36 in Sri Lanka, Rs 49.08 in Bangladesh and Rs 57.91 in Nepal. In the US, diesel is priced at Rs 54.55 per litre, while it costs Rs 77.84 in France, Rs 83.36 in Germany, Rs 99.38 in UK and Rs 93.11 in Italy. "Whereas the price of petrol in India is comparable to many of the countries, the price of diesel in India is lower in comparison to the neighbouring and European countries," Singh said. The difference in rates of petrol and diesel is most due to tax structure - while the government levies Rs 14.78 per litre excise duty on petrol, the levy on diesel is just Rs 2.06 a litre. Within India, petrol is costliest in Kolkata at Rs 76.15 due to high incidence of local sales tax or VAT. It is lowest in Panjim where it is priced at Rs 57 per litre as Goa government does not levy any VAT on the fuel.(PTI)
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While the coal block allocation issue cast its shadow on Parliament on 5 September paralysing proceedings for the eleventh day ith BJP remaining unrelenting on the demand for resignation of Prime Minister Manmohan Singh, the probe into the allocations have already started. (Read: Coal Block Issue Stalls Parliament For 11th Day)A total of 10 private sector firms including Usha Martin, Monnet Ispat and Energy and Corporate Ispat have been asked to present their side of the story for the delay in developing coal blocks on the first day of IMG's three-day review meeting, starting 6 September."Ten coal block holders will make their presentations on the first day of the three-day IMG meeting starting tomorrow. The firms which will make presentation are Usha Martin, Monnet Ispat and Corporate Ispat and Alloys among others," a source close to the development told PTI.He said all the 10 coal block allocates had already been communicated to be present at the Inter-Ministerial Group (IMG) meeting.In total, 35 companies have been asked to present details of investments made till now and the reasons for not starting coal production.Earlier, on 4 September, the Central Bureau of Investigations (CBI) had registered five cases in connection wih the alleged scam in allocation of coal mines and conducted searches in nearly 30 places across the country. (Read: CBI Files Cases Against 5 Cos ) After registering five FIRs in court, CBI teams fanned out to nearly 10 cities including Delhi, Mumbai, Kolkata, Patna, Hyderabad, Dhanbad and Nagpur and searched premises of owners of some companies. The companies named in the FIR by the CBI are Vini Iron and Steel, Nav Bharat Steel, JLD Yavatmal which is said to be linked to the family of Congress MP Vijay Darda, JAS infrasrtucture of Abhijeet Group and AMR Iron and Steel and their directors and unknown government officials, the CBI said. The Ruias-owned Essar Power on 5 September clarified that its acquisition of Navabharat Power Pvt Ltd (NPPL) — one of the five companies raided by the CBI in connection with the coal block allocation scam — was "transparent" and NPPL was never its front company.The agency, which had registered a Preliminary Enquiry in June this year, has slapped charges of cheating and suppression of facts against the companies. The IMG, headed by Zohra Chatterji, additional secretary, Coal, was set up in July to recommend action against the coal block allottees for not meeting timelines set for beginning production.B K Jhawar-promoted Usha Martin had been allocated Lohari coal block in Jharkhand for making steel in 2005. Monnet Isapt and Energy, promoted by Sandeep Jajodia, was given the Utkal B2 block, aimed at using as a raw material for producing sponge iron, in Odisha back in 1999.Corporate Ispat and Alloys, which is promoted by Manoj Jayaswal, got the Chitarpur block in Jharkhand in September 2005 for producing sponge iron.Usha Martin's Lohari block has already been recommended once for de-allocation by the IMG as "there was hardly any physical progress or investment reported", but it will be reviewed once again, as Coal Secretary S K Srivastava desired.Stalemate In ParlimentLok Sabha and Rajya Sabha were adjourned till noon on 5 September after Opposition triggered ruckus on the issue and the Lower House adjourned for the day minutes after it re-assembled.When the Rajya Sabha met at noon, a scuffle broke out between Naresh Agrawal (SP) and Avtar Singh Karimpuri (BSP) during introduction of a Bill seeking to provide reservation in promotion to SC/ST in government jobs.The bill was introduced by minister of state for personnel V Narayansamy amid commotion due to the scuffle and slogan shouting by BJP on the coal block allocation issue.As the unruly scenes continued, the House was adjourned till 2 PM.Amid uproar over the coal issue in the Lok Sabha, members of the DMK, a constituent of the ruling UPA alliance, as also AIADMK were in the Well with DMK members holding placards against the upcoming visit of Sri Lankan President Mahinda Rajapaksha.In the melee, the government withdrew the Securities and Exchange Board of India (Amendment) Bill, 2009 in Lok Sabha.Acquisition of Navabharat Power Legitimate: EssarThe Ruias-owned Essar Power said its acquisition of Navabharat Power Pvt Ltd (NPPL) — one of the five companies raided by the CBI in connection with the coal block allocation scam — was "transparent" and NPPL was never its front company.Stating that it had paid Rs 230 crore to acquire NPPL in two tranches in 2010 and 2011, three years after the company was allocated two coal mines in Odisha, Essar Power said it had "no dealing with either of the original promoters until this transaction".Essar Power "categorically denied" allegations that Navabharat was its 'front' company and asserted the deal was "legitimate"."Following the acquisition, Essar Power has invested more than Rs 500 crore in developing the project and has also achieved financial closure, with ICICI Bank having underwritten debt financing of more than Rs 3,720 crore," the company said in a statement. "The project is currently awaiting certain government approvals," it added.In a separate statement, Navabharat Group said it had sold its 50 per cent in NPPL to Essar Power "in a transparent and diligent manner and full disclosures were made to the stock exchanges on July 13, 2010 and April 20, 2011".The sale, it said, followed Malaxmi Group - the other promoter in NPPL, selling its stake to Essar Power "in total disregard to the interest of the other investor" (Nava Bharat Group)."...equity divestment (50 per cent in NPPL) was due to exigencies beyond the controls of the Nava Bharat Group and was in the best interest of its shareholders," the Hyderabad-based firm said.The "active management" of NPPL, including the pursuit of the coal block at the relevant time, was with Malaxmi Group-appointed Managing Director, it added.
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The Oil Ministry has moved a Cabinet note seeking immediate hike in diesel, cooking gas and kerosene prices and limiting supply of subsidised LPG cylinders to 4-6 per household in a year. The ministry's proposal to the Cabinet Committee on Political Affairs (CCPA) also includes barring households with income of more than Rs 50,000 per month or Rs 6 lakh in a year from getting subsidised LPG cylinders. The Cabinet committee is likely to consider the hike at the first occasion it meets after the current monsoon session of Parliament ends on Friday, a top Oil Ministry official said here today. Also on cards is an increase in petrol price on which the state-owned oil firms, despite having freedom to raise rates, are losing close to Rs 6 per litre. The price hike may take place anytime after Friday. "The situation facing us is very grim. We can no longer afford to postpone a price hike," the official said. "We have not recommended the quantum of increase in rates but have analysed the situation that warrants an immediate price rise," he added. Diesel, domestic LPG and PDS kerosene rates have not been changed since June 2011 even though cost of production has soared 28 per cent. Oil PSUs are losing Rs 560 crore per day on sale of diesel and cooking fuel at present, and are forced to resort to short-term borrowings to meet funds needed for importing crude oil (raw material for making fuel).
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