It is important to be vigilant about the dealings of State-owned companies, especially those suffering from a credibility crisis. Coal India Ltd (along with its seven mega-size mining subsidiaries), fuelling more than half of the country’s primary energy needs, is perceived to be one.

It is therefore expected that the designated authorities be vigilant on the affairs of this company. And, if the hundreds or thousands of cases pending against CIL officials is any indication, the Vigilance Commission and law enforcing agencies are definitely on the job.

While it is debatable if such actions were successful in eliminating corruption, the checks and balances put in place to ensure transparency have had at least one important fallout. It has made the generally slow decision making process, typical of a PSU, even slower. So much so that it takes several years to take even important business decisions such as procurement of key equipment to step up production.

One such initiative to procure a range of high capacity equipment to increase opencast production is making the the rounds from one table to another for the last six years. This is despite the fact that the company is not short of cash and the country is suffering from inadequate availability of domestic coal.

The reasons behind such incidents of perpetual inaction are once again highlighted in a recent outcry on alleged anomalies in signing fuel supply pacts (FSA).

A vigilance report has apparently pointed out that the company entered into fuel pacts with 11 power projects (including both commercial and captive producers) in violation of the laid down procedures on land acquisition, bank credit, environment and forest clearance documents, etc.

The power projects in question are: Maharashtra-based Dhariwal Infrastructure of RP Sanjiv Goenka group (300 MW); SKS Power Generation (220 MW), Chhattisgarh; NRI Power & Steel (7.5 MW) Chhattisgarh; Maruti Clean Coal and Power (300 MW); Chhattisgarh; Neeraj Power (7.5 MW) Chhattisgarh; NTPC Dadri-II (980 MW), UP; Maithon Power (500 MW) JV of DVC and Tata Power in Jharkhand; Rosa Power (600 MW) UP; Adhunik Power (540 MW) Orissa; DVC Mejia (500 MW), WB and; UPPCL – Bara TPS, (1980 MW) UP.

According to a CIL release on February 4, the FSAs were signed only with three consumers — Maithon Power, Rosa and Adhunik. Details available with Business Line suggest that Maithon Power or its promoter DVC is in possession of required land for the project. There was hardly any problem with regard to Rosa Power except an ambiguity on the location of the project according to land records!

Though FSAs have not been signed with the remaining four, a close scan reveals that there are mere technical issues to be sorted out to enter the fuel pacts. Dhariwal, for example, submitted credit arrangement letter issued by ICICI Bank but has now been asked to submit the agreements with individual banks. The power plant is in advanced stage of completion. Some projects have even been commissioned and are running.

“It is all right to be vigilant but the system in place may be adding to the inefficiencies of PSUs,” a CIL official said on condition of anonymity. He has a point.

(This article was published on February 11, 2013)
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