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Coal-fired political minefields dominate 2012

New Delhi, Dec 26: Coal fired a minefield of controversies in 2012, fuelled by CAG estimates of a huge Rs 1.86 lakh crore loss for allocation of coal blocks to business houses without auction which
PTI December 26, 2012 11:56 IST
PTI
New Delhi, Dec 26: Coal fired a minefield of controversies in 2012, fuelled by CAG estimates of a huge Rs 1.86 lakh crore loss for allocation of coal blocks to business houses without auction which served as fodder to the Opposition parties to target the government.



The blaze started from a leaked draft report of the Comptroller and Auditor General (CAG) that initially had a figure of Rs 10.6 lakh crore loss resulting from the controversial allocation of coal blocks to about 100 companies without bidding.

While the final figure of the benefits that might have accrued to the private firms was Rs 1.86 lakh crore, the political turmoil almost washed out the Monsoon Session of Parliament, the second worst since the 2009 general elections, causing a huge embarrassment to the government.

The Opposition onslaught was directed towards Prime Minister Manmohan Singh who held the coal portfolio between 2005 and 2009, the period of allocation of mines without auction, as pointed out by the government auditor.

The high-voltage drama could somehow cool after the media focus shifted to several other politically fertile issues like FDI in multi-brand retail and the attacks by civil society.

But, the government did bow to the pressure and announced cancelling licences of 24 mines and imposed penalties like deducting bank guarantees of many others.

These actions were recommended by an inter-ministerial group (IMG) which were accepted by the government which found itself on the back-foot.

The CBI was also roped in to probe into the coal blocks allocated under questionable circumstances.

Several big firms like JSPL, ArcelorMittal, GVK Power, JSW Steel, Bhushan Steel had to face penal action -- either cancellation of allotments to them or forfeiture/deduction of bank guarantee.

Congress MP and industrialist Naveen Jindal-led Jindal Steel and Power was also one of the companies embroiled in the controversy. Some other big names involved in the controversy included former Minister Subodhkant Sahai, Premchand Gupta and Vijay Darda.

Another issue which dominated the business news throughout the year was the tussle between Coal India (CIL) and power companies over fuel supply.

Supported by the Power Ministry on the issue, the Prime Minister's Office intervened which led to both Coal and Power Ministries announcing to take the process of inking pacts forward. So far 33 out of 87 power companies have entered into fuel supply pacts with CIL.

While CIL, the country's near-monopoly coal miner was given a Presidential directive to commit assured fuel to power firms, a few independent directors on the Board of the listed company objected to the government diktat.

A prominent minority shareholder of UK - TCI, even dragged the company to the court on the issue.

The country continued to face coal shortage impacting the power supply. Against the revised target of 447 million tonnes (MT) CIL could produce 435 MT, necessitating imports.

Since imports turned out to be expensive, a new demand was made mainly by the private power producers - supported by Planning Commission Deputy Chairman Montek Singh Ahluwalia - to resort to what is known as 'price pooling'. It means averaging the sale price of domestic and imported fuel.