New Delhi:
Refuting allegations of a coal scam enabled by a weak government policy, the Coal Ministry is expected to submit its defence to a parliamentary committee on Friday.
A political crisis has erupted after the national auditor filed a report last month alleging that coal blocks were allocated to private players without transparency between 2004 and 2009. The result is that the government lost upto Rs 1.86 lakh crore, concluded the Comptroller and Auditor General or CAG. Because the Prime Minister was in charge of the Coal Ministry during some of those sales, the opposition BJP says he must resign, an outcome ruled out by his party.
After the CAG files reports, they move to the Public Accounts Committee (PAC) of parliament, which combines MPs from different parties. The Coal Ministry will, most likely om Friday, submit a written reply countering the calculations of the auditor. For example, the ministry will counter the auditor of overlooking the fact that the costs of extracting coal vary from mine to mine, and that when private firms who were given cheap coal fields made profits, the government gained through taxes.
So far, the government and the Prime Minister's Office have stressed that when the allocations were made, the Indian economy was growing and industrial development was a priority. Existing rules did not allow for an auction; when the centre suggested one, state governments ruled by opposition parties including the BJP and the Left objected, arguing that a competitive bidding process would raise the price of coal and adversely affect industry in their regions.
The auditor said that a committee that screened applications for coal blocks lacked transparency; also, that the government should have introduced an auction sooner.
The CBI has already filed cases against five companies and their directors for misrepresenting their financial track record and their technical expertise to corner coal blocks. Sources say another six cases or FIRs will be filed in the next few days. Among the promoters accused last week of conspiracy and cheating are Manoy Jayaswal, who owns the Abhijeet Group and Congress MP Vijay Darda as well as his brother Rajendra who is the Education Minister of Maharashtra. Mr Jayaswal and the Dardas set up a couple of projects together. The politicians have denied that they used their position to help their companies land coal blocks.
Sources in the CBI say that among the companies on the CBI's radar now are Jayaswal Neco, which is owned by Mr Jayaswal's younger brother, Ramesh.
The Jayaswal family which belongs to Nagpur holds 10 coal blocks through a maze of firms, making it one of the largest beneficiaries of coal block allocations. The family owns one steel plant in Siltara in Maharastra, which is run by Jayaswal Neco.
The patriarch of the family is Basant Lal Jayaswal. While older son Manoj runs the Abhijit Group, younger sibling Ramesh runs the parent company, Jayaswal Neco. A third brother is named Arbind, and has stake in AMR Iron and Steel (AMR stands for the initials of the three brothers).
AMR was allotted six coal blocks, five of them in Jharkhand.
Jayaswal Neco features among 58 companies that were issued show cause notices by a government committee for under-performance. Some of these firms are likely to lose their permits in the next few days for failing to meet the milestones required of coal block allottees.