{"id":3368,"date":"2012-03-22T15:20:28","date_gmt":"2012-03-22T09:50:28","guid":{"rendered":"http:\/\/calamur.org\/gargi\/?p=3368"},"modified":"2012-03-22T15:20:28","modified_gmt":"2012-03-22T09:50:28","slug":"guest-post-subhashish-on-coal-gate","status":"publish","type":"post","link":"https:\/\/calamur.org\/gargi\/2012\/03\/22\/guest-post-subhashish-on-coal-gate\/","title":{"rendered":"Guest Post – Subhashish on “Coal Gate”"},"content":{"rendered":"

For the first time ever, POV has a guest blogger. Hopefully this will become a regular feature. Shubhashish<\/a><\/strong>, friend, jouranlist and someone who is very interested in Steel and Coal as sectors sent this in. It is also cross posted on his blo<\/a>g. <\/strong>I have published this as is, not even a single comma or fullstop changed. He texted me a few minutes ago to say that the CAG letter to the PMO<\/strong> <\/a>bolsters this post.<\/p>\n

\n

The CAG coal scam report. I don’t see much merit in the report. More
\nso, drawing parallels with the 2G scam is utterly wrong as the premise
\nof both the cases are completely different.<\/p>\n

In 2G, A Raja sidetracked the boundaries of the policy, made it
\nfirst-come-first and thereby making money for himself and favouring
\nselect companies. In the so-called Coalgate, the policy to allocate
\nmines based on companies allocation is an age policy. What should be
\nnoted is how many allocations have been made.<\/p>\n

Yes, there have been irregularities in the allocations as the
\ngovernment has the power to allocate to companies it deems fit. But
\npegging entire allocation as a scam is juvenile. Most of the power,
\nsteel, aluminium, cement, etc companies in India do not have coal
\nblocks allotted to them. It takes years before anyone gets an
\nallocation.<\/p>\n

Therefore, the targets to achieve a set power production in five year
\nplans have been missed consistently. It is because of this that the
\ngovernment thought of auctioning the coal blocks. The proposal is
\nstill under discussion but is likely to be passed soon.<\/p>\n

In my opinion, saying that Rs 10 lakh crore was lost because the coal
\nblocks were not auctioned doesn’t hold much water. Anyway, the water
\ntable in this country are fast depleting so I am not going to argue
\nmuch about the scam.<\/p>\n

Auctioning of national resources is the way to cut down on corruption
\nand even in the case of coal blocks, the move has been under
\nconsideration from much before the 2G scam surfaced.<\/p>\n

What I want to draw your attention towards, is Coal India. World’s
\nlargest coal company and a government of India enterprise which raised
\nmega monies last year by selling its stake to investors, including us.<\/p>\n

Coal India, now, is no more a fiefdom of the government. Investors
\nhave put in money and they demand fair practices so that they could
\nearn returns on their investments. Nothing wrong with that. However,
\nCoal India sells coal to companies, government and private, at below
\nmarket rates. Why? This was fine till the time it was a complete
\ngovernment owned company. Not anymore.<\/p>\n

And a few months ago when Coal India tried to increase prices and
\nchange the way it charged customers for the coal they bought, it met
\nwith a great resistance. The coal minister intervened and rolled-back
\nthe price hike.<\/p>\n

Isn’t this against the culture of free market which Coal India was
\nmade a part of after raising money from private investors?<\/p>\n

Also, see the trend of coal production by this Navratna company. Its
\nproduction has been dropping ever since with no solution in sight. It
\nis a monopoly coal supplier in India and power companies have no other
\noption but to buy coal from Coal India. But how can they buy coal from
\nthe company when there is no coal available because Coal India is not
\nmining enough? Not only mining enough, its production is falling.<\/p>\n

It is then the government allowed companies to import coal to meet
\ntheir requirements.<\/p>\n

India has one of the largest coal reserves in the world and Coal India
\nis the largest coal company in the world. Isn’t it strange that such a
\ncompany cannot meet coal demand and companies have resorted to
\nimporting? If there has to be an audit, do it on Coal India.<\/p>\n

I would have termed Coalgate as a scam if most of the companies had
\ngot coal allocations. But the fact is very different. Some companies
\nhave got and most are still in waiting. This is the reason why
\ncompanies are importing coal. Because they do not have any.<\/p>\n

Every companies which requires coal is in favour of auctioning. They
\nare ready to pay sky-high rates for coal blocks. They say at least we
\nwill have our own coal and won’t have to suffer with the global coal
\nprice fluctuations.<\/p>\n

And this is the reason why the latest 5 year plan has reduced
\nelectricity production targets. Because there is no assurance of coal
\nsupply and global prices are high.<\/p>\n

Auctioning coal block means your power costs will go up. The power
\ncompanies have two types of contracts, short and long term. Some part
\nof their electricity generation is tied up with state power
\ndistribution companies at a previously agreed upon price. With Coal
\nIndia not meeting the demand, companies are importing and coal costs
\nare soaring.<\/p>\n

It is then these power companies went to their respective state
\ngovernments to renegotiate power rates. They were shown the signed
\nagreement and the door.<\/p>\n

Why will a power company set up a power plant when it knows that it
\nwill lose money of every unit of power generated?<\/p>\n

Yes, there might be favours in whatever coal block allocations made,
\nbut it is time we look at the bigger picture to solve the problem
\nrather than bickering about what the policy was and what happened in
\nthe past.<\/p>\n

Auction coal blocks and break Coal India’s monopoly. Power costs will
\ngo up for everyone. This is the price we have to pay for development.
\nSooner or later. Gear up.<\/p>\n<\/blockquote>\n","protected":false},"excerpt":{"rendered":"

For the first time ever, POV has a guest blogger. Hopefully this will become a regular feature. Shubhashish, friend, jouranlist and someone who is very interested in Steel and Coal as sectors sent this in. 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