Transparency is name of the game
28 Aug 2014 4:16 AM IST
The Supreme Court’s declaration that allocation of all 218 coal blocks since 1993 has been ‘illegal and arbitrary’ is both a landmark observation as well as has the potential to seriously destabilise the energy sector, which is already reeling under too many problems. While the top court is absolutely right in saying that whimsical and non-transparent manner of allocation had resulted in unfair distribution of national wealth in the hands of a few private companies, whose coal mining licences are now under scanner, whether or not the blocks will be withdrawn has been left to a later decision come September.
While it is extremely important to underscore the raging corruption in the ad hoc manner in which the precious natural resource was distributed to the private players, could legal and technical flaws only be premise enough to strike off two decades of work, its extent notwithstanding? Since the allocations between 1993 to 2011 took place under both the NDA and UPA regimes, perhaps it is fair to assess that mere governmental apathy and inaptitude hadn’t resulted in the staggering revenue loss estimated at lakhs of crores of rupees. In fact, technical fallacies within screening committees that overlooked shortcomings of private bidders as well as the tendency to not meet the production targets from the captive coal mines despite promises to the contrary are as fundamentally to be blamed as the governments that gave away the coal blocks at throwaway prices to undeserving candidates.
However, there are a number of considerations that must be kept in mind while taking the next step. First, exponential amount of public money, in the form of loans from PSU banks and government waivers, has been spent on developing these coal blocks. While the manner of allocation has been arbitrary without a doubt, particularly that of over 190 such allocations under UPA regime, the stakes are enormous to be cancelled altogether and be declared null and void. Such a scenario is likely to benefit tertiary promoters who profited from borrowing and subletting the credit loaned by government financial institutions.
Secondly, developing the coal blocks, even if inadequate, had contributed over 36 million tonnes of coal, amount to six to nine per cent of the total production of coal, thereby impacting significantly the total output. This did have a cascading effect on coal prices, bringing them down by ever so slight a margin, but which meant some relief for the common man, who is already burdened under a high power tariff. Importing coal has been the reason why energy prices have stayed at an unbearably high level and it is the duty of the authorities to ensure it is brought down to a sustainable level.
Finally, since the allocations essentially fell through the cracks in the procedural formalities, ensuring a completely transparent, rule-based and effective competitive bidding is the only way to rectify the years of abuse.
While it is extremely important to underscore the raging corruption in the ad hoc manner in which the precious natural resource was distributed to the private players, could legal and technical flaws only be premise enough to strike off two decades of work, its extent notwithstanding? Since the allocations between 1993 to 2011 took place under both the NDA and UPA regimes, perhaps it is fair to assess that mere governmental apathy and inaptitude hadn’t resulted in the staggering revenue loss estimated at lakhs of crores of rupees. In fact, technical fallacies within screening committees that overlooked shortcomings of private bidders as well as the tendency to not meet the production targets from the captive coal mines despite promises to the contrary are as fundamentally to be blamed as the governments that gave away the coal blocks at throwaway prices to undeserving candidates.
However, there are a number of considerations that must be kept in mind while taking the next step. First, exponential amount of public money, in the form of loans from PSU banks and government waivers, has been spent on developing these coal blocks. While the manner of allocation has been arbitrary without a doubt, particularly that of over 190 such allocations under UPA regime, the stakes are enormous to be cancelled altogether and be declared null and void. Such a scenario is likely to benefit tertiary promoters who profited from borrowing and subletting the credit loaned by government financial institutions.
Secondly, developing the coal blocks, even if inadequate, had contributed over 36 million tonnes of coal, amount to six to nine per cent of the total production of coal, thereby impacting significantly the total output. This did have a cascading effect on coal prices, bringing them down by ever so slight a margin, but which meant some relief for the common man, who is already burdened under a high power tariff. Importing coal has been the reason why energy prices have stayed at an unbearably high level and it is the duty of the authorities to ensure it is brought down to a sustainable level.
Finally, since the allocations essentially fell through the cracks in the procedural formalities, ensuring a completely transparent, rule-based and effective competitive bidding is the only way to rectify the years of abuse.
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