CoalGate - Scam Within a Scam..

The State Government of Odisha/Chattisgarh made two key demands to the Union Government.

1) Royalty Share between State and Central govt.

2) Fixing of Coal Royalty on Ad-Valorem  Basis.

The Chief Ministers of Odisha and Chattisgarh wrote to the Union Government several times on the Issues of Royalty and Fixing of Coal Royalty on Ad=Valorem basis. The Union Government which blames the state Governments for delay in auction procedure and auction of coal was silent and did not reply to the State Government on this issue.

Royalty 

Usage based payments made by one part the "Licensee" to another the "Licensor for the right to ongoing use of the asset/mines.Royalties are typically agreed upon as a percentage of gross or net revenues derived from the use of an asset.

Ad-Valorem 

 Its a tax that is based on the monetary value of the Product. Literally the term means 'According to the Value'  Ad-Valorem has the advantage of adjusting the Tax Burden according to the amounts the Consumer spends on the taxed item. Thus avoiding the serious discrimination of specific rates against the Low Priced varieties of the Commodities.

State Governments in 2005/2006/2007 wrote to the Union Government for increased share in Royalty from the Mineral resources. They wanted more share of Royalty fee from Mineral resources so that they use that money to develop backward areas and contain the Maoist Problem. The Union Government has not acted on those demands from State Government.

As per the Mines and Mineral Development & Regulation Act 1957, the centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the state should be compensated accordingly for the delay in revision of royalty. The Union Government ought to have revised the royalty on coal in 2005 but failed to do so. It revised the royalty in 2007. The State and The Union Government lost revenue due to the lack of professionalism and lack decision making within the Union Government. Prime Minister himself was the Coal Minister during those times. The Union Government has not compensated to the State Governments for the loss in revenue it caused the states due to its indecision.

Private players who mined the Natural resources benefited from the indecision of the Union Government. 

State Governments opposed the Union Government's formula for calculating royalty on the basis of a Fixed Percentage of the the Net or Gross Revenue.. State Governments as Early as 2007 wrote to the Union Government stating Royalty should be based on Ad-Valorem basis. Union Government sat on those demands from the state government for 5 years and finally approved the Royalty will be based on Ad-Valorem basis on April 12th 2012.

The delay in decision by the Union Government has resulted in loss in huge revenue to both the State as well as the Central Government. 

The Prime Minister cannot blame Coalition compulsions for non-revision of the revision of Royalty on Natural Resources. Its squarely in the domain of the the Union Government and Minister In-Charge who happens to be the Prime Minister.

Coal Prices were in the upswing continuously,Non-Performance on revising the Royalty of Natural resources every 3 years and Indecision in shifting to Ad-Valorem basis resulted in huge loss to State and Union Exchequer.

Whom will The Prime Minister blame for the these indecision?

Don't know whether the Comptroller and Auditor General has calculated the loss occurred due the indecision of the Union Government in revising the Royalty on Natural Resources.

Media won't tell you about the Skulduggery of  the Union Government and its indecision that resulted in loss loss in revenue to the Exchequer. 

Dubious Defence of the Prime Minister in Coal Scam.

1) NDTV 

2) Rediff

3) Tehelka

4) PM's Statement

Please read the three Link above. It will suggest as if State governments were responsible for Coal Scam. It puts the Entire Blame at the door steps of the Non-UPA governed states.

Prime Minister cites the letter of the Chief Ministers of Rajasthan, Chattisgarh, Madhya Paradesh, Odisha and West Bengal to justify that there was No Loss to the Exchequer.

We Need to Know few basic terms before analyzing the PM Statements and the Stories that blame the State governments for the Coal Scam. We Should know the difference between Captive Mines and Non- Captive Mines. We Should also know the meaning of the term Value Addition. 

Captive Mines

The term "captive" infers being locked up. In the sense of a policy, it is a mandatory allocation of resources. The intent of the captive coal mining policy is to allocate a specific block to a specific need. 

Non-Captive Mines

Non-Captive Mines not a not Locked up mines. These are blocks given traders to mine and export or sell the coal mined for the usage of different Industries. 

Value Addition

A broad definition of value addition is to economically add value to a product and form characteristics more preferred in the market place.

Captive Mines mines create value addition by creating Industries, Full Times Jobs, Better infrastructure, Better life whereas Non-Captive Mines creates jobs like NREGA Jobs for 100 or so days a year. So every State Chief Minister opposed  Non-Captive Mines policy of the Union Government.

Read the March/April 2005 Letters of Govt of Rajasthan,Chattisgarh and MP's letter on Coal block Allocation. They have written about Captive Mines. Letter clearly talks about Captive mines and the Project Concerned. It has not talked about Non-Captive mines.Letters of Rajasthan/MP/Chattisgarh Govt are well argued, nuanced and extremely clear.clearly distinguishes Captive/Non-Captive Blocks.  Letter talks about States saying they will allocate Coal/Lignite blocks to People Who set up Down Stream Projects/Projects that creates Value addition and Full Time Skilled employment. 

The State Governments wanted to allocate Coal/Lignite blocks to those who set up Power Plants/ Cement Factories and Iron and Steel Industries.  

The State Governments have opposed to Union Government move of allocation of Coal Blocks to traders. They did not want traders to mine coal/lignite and sell of export to users outside the state. State Government wanted to create meaningful skilled jobs for its people so that they can have a better life. 

Letters from the State Government also asked the Union Government to increase the Royalty on coal/Lignite so the money that states get from Increased Royalty can be used for development of Maoist and under developed part of the states. 

All states agreed to the auction of Coal Blocks. Its the Prime Minister's office through its Note/Memo on 24th June 2004 Sabotaged the auction of Natural resources.

Prime Ministers office asked for a legal Opinion from Ministry of Law whether executive order is good enough or amendment of the Minerals act is necessary for the auction Procedure.  First Law Ministry suggested Executive order is enough then a week letter the same Law Ministry wrote back amendment to amendment to Minerals act is necessary. It took two years for Law Ministry to give an opinion on Prime Minister's Query.

1) Question here is not about auction of the coal/lignite blocks. its about fictitious firms and Beedi/Garments manufacturers getting Coal blocks.. Prime Minister should answer why Government allocated Coal Blocks to these fictitious and Non-core companies.

2) Prime Minister should answer why it took 2 years for Law Ministry to reply to the query raised by the Prime Minister's Office.

3) Prime Minister's statement is silent on Traders/Fictitious firms getting Coal blocks.

4) Prime Minister blamed the allies and opposition for the amendment bill getting delayed. If he can stake his Government for Nuke Deal. He can get allies and others for Presidential elections, He should have reached to all to build consensus on Minerals amendment act. He failed to do so.

5) Prime Minister should not blame the Chief Ministers for the loss coal scam caused to the exchequer.

6) Many companies did not even have the equipment to mine coal, On What basis Prime Minister is saying We did all this to augment the Production of Coal.

7) Power Situation is now worse than it was in 2004. How did this Policy helped increasing the generation of power?

8) Power PSU's used to have 35 days of Coal Stock, Its now having just 7 days of Coal stock. Prime Minister argument of we did this to augment coal supplies falls flat.

9) Prime Minister should answer how unmined Coal is contributing to the growth of the Country.

10) Prime Minister should not blame the opposition if his Govt fails to bring in a Legislation to the parliament.

11) Prime Minister blaming CAG and Opposition is like a kid giving 1000 excuses to his/her parents for failing in the Exam.

12) Prime Minister should answer why many Coal Blocks were given between the period January 2009 and March 2009. All this were allocated months before the General Elections. Was there any Quid-Pro-Quo in this allotment.?

Prime Minister should take full responsibility for the Coal Scam. He should not pass the buck to Opposition/State Governments and the Baabus in PMO/Ministry of Coal and Screening Committee.

Prime Minister should behave like a Prime Minister and accept responsibility for the Coal Scam. He Should not behave like a Babu and pass the buck to State Government and Opposition. 

Coal Gate- Govt lies, Zero Loss and Non-Auctioning of coal

Read Jaiswal's reply in Lok Sabha on 21/8/2010.. By clicking on the Pic..

Jaiswal on 21/8/2010 to Lok Sabha that all states have agreed to auctioning of Coal Resources. 

A Meeting of State Government and Ministry of mines was convened. All Concerned state Minister were present along with Union Minister of Mines. All of them agreed to auction of Coal and accepted the recommendation of Union Of India.

As Early as 2010 State Governments agreed to auctioning of Coal. Congress led UPA Government can't blame the Government of Chattisgarh/Rajasthan/Odisha/West Bengal for Non-Auctioning of Coal. 

Government of India is trying to fool everyone by saying State Government opposed auctioning of Coal. Fact remains everyone accepted that auctioning of Coal Block is the way forward. Government of India failed to put in place a auction procedure. Government of India should be held responsible for the loss due to the Non-Auctioning of Coal. 

Natural resources come under the Union Government. State governments are just recommending authority. Section 11 A of the Bill Clearly says Union Government of India will be the one who will select the companies to which coal blocks will be allocated. State Government will give license to those companies in which are selected by the Union Government. 

Union Government of India selected all those companies which got Coal Blocks. State Government had no option but to give License to those people got coal blocks allocated by the Union Government. Union government of India should take the entire blame for non-auctioning of coal and loss to the exchequer due to acts committed by the government of India.

Union Government of India did not take the recommendation of Govt of Odisha and Chattisgarh to increase the royalty on coal. Both Govt of Odisha/Chattisgarh wanted the money generated from the increased royalty of coal be used to develop the Maoist affected and backward areas of the state. Govt of India did not agree to this suggestion as well. State Governments lost crucial finances due to the lethargy of the Union Government of India.

Government of Chattisgarh and Odisha recommended to the Union Govt that Coal Blocks be given to end users like Power Plants/Cement/ Iron & Steel industries, This suggestion of the state government were also ignored by the Govt of India

Coal Scam is more about fictitious firms and traders getting coal blocks and exporting coal.

Power Plants were supposed to have 35 days of coal stock but power plants across India is having just 7 days coal stock this has resulted in poor out from Coal based power plants. Traders instead giving coal to power plants they exported coal. Power sector suffered as result.

Government argument of Coal were not auctioned for rapid industrialization is a very bad argument. Industries Except in Gujarat and Chattisgarh are facing power Holidays varying 8-17 days month. Govt by not providing power to industries losing out on revenue in a Big Way. MSME are shutting shop across India. Govt argument that it lead to rapid growth falls flat. 

Government of India treated the suggestions and recommendation of State Govt with disdain, Can't blame CM's latter for Non- auctioning of Coal. Union govt has no locus standi to blame the Opposition for Coal Scam.

This government is know for retrospective taxation. why not charge the companies which got coal blocks with retrospective effect from 2004? What stops them from doing so? acceptance of guilt? 

Government of India is solely responsible for Coal Scam. There is no two ways about it. Its time Govt of India fix responsibility for this scam and take corrective steps.

Post Script- Media playing ball with Government of India and obfuscates facts from Public. Media fails to ask tough questions to the Congress and the government. Media needs to be more neutral. Media buys the Government Narrative on coal Scam. Pretty Dangerous....