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10 things about coal block allocation that you should know

16 Oct 2014 |By: Team Finalaya

Coal block allocation

Most part of September, 2014 and the early days of October, have brought fresh light to several factors surrounding the coal block allocation scam.  Since most of these have come in as part of everyday business news, we have collated some of the major facts surrounding this scam.

1. During the period 2004-2006 coal blocks were allocated to several large industrial houses without following the usual process of inviting competitive bids.  Major names like the Tatas, Essar group, Jindal group of Naveen Jindal, Arcelor group of Lakshmi Mittal, and Abhijit group figure in the list of those who benefited from the action. Interestingly, the then Prime Minister Manmohan Singh held the coal portfolio during the period when these allocations were made. However, the Supreme Court has now termed all allocations beginning 1993 to 2010 as illegal.

2. Not only was the due process of inviting bids sidelined, but the reporting also suffered discrepancies and the allocations were deemed as arbitrary.

3. About 194 coal block allotted to private entities have now become the subject matter of litigation initiated originally by Prakash Javedkar and Hansraj Ahir of the BJP.

4. Although the value of the scam was initially put at Rs.10 lakh crores, a final report from the CAG puts the losses to the exchequer at Rs.1.76 lakh crores.

5. It was the 2012 report of the CAG (Comptroller and Auditor General) that highlighted the magnitude of the scam.

6. In 2013, it was the standing committee of the Parliament that played a significant role by holding the allocation process between 1993 and 2008 as arbitrary. The committee also demanded an investigation to cover all those who were involved in the scam.

7. 134 coal blocks were awarded during the tenure of Manmohan Singh as Prime Minister, who also held the coal portfolio between 2006 and 2009. The coal reserves given away during this period is an estimated 40 billion tones.  Shibu Soren, Dasari Narayan Rao and Santosh Bagodia are the other ministers who held charge of this portfolio at varying points in time when the coal block allocations were made.

8. Ministers of state for coal like Dasari Narayan Rao, Santosh Bagodia and cabinet minister Shibu Soren also held the portfolio during the period.

9. A special CBI court was set up by the Supreme Court in July, 2014 to take up trial of all coal allocation cases.  Although Kumara Mangalam Birla and PC Parakh, who was coal secretary when the allocations were made, were also named in the charge sheet filed by the CBI, in August, 2014, the CBI took back its charges against the two individuals.  Mr.Parakh had also claimed that all procedures laid down were followed during his tenure, and that if he is held guilty, the then prime minister Manmohan Singh should also be held guilty.

10. On 25th August,2014 the Supreme Court of India has passed its judgment holding that all coal block allocations made between 1993 and 2010 are illegal. The apex court also pointed out that public interest and common good suffered heavily as a result of the scam.

Although the Supreme Court decision has sent out a strong message to the national as well as international  business community, the consequences are far reaching, particularly for the power sector. 
One block each allotted to NTPC and SAIL and 2 blocks allotted to Anil Ambani’s  Sasan Power escaped  the wrath of the Supreme Court.  Other entities have been given time till 31st March, 2015 for winding up operations.

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