By Indian standards, three years is not a long time to bring the high and mighty to heel. A special court of the CBI has held former Jharkhand chief minister Madhu Koda and three others guilty of conspiracy and corruption in allotting a coal block to a Kolkata-based company. In September 2014, the Supreme Court cancelled the allotment of 204 captive coal blocks on a discretionary basis by the screening committee in the Union Coal Ministry. As former coal secretary PC Parakh points out in his memoirs, the ‘coal mafia’ — an amorphous entity that extends from local contractors to legislators and bureaucrats — actively scuttled a move during the UPA days to subject the allotment of coal mines to a bidding process. The PMO at that time failed to scuttle these vested interests, even as it seemed to favour the bidding route, if in an somewhat ambivalent fashion. It would seem that Koda was one of the kingpins in scuttling transparent processes, just as former Union coal minister Shibu Soren was. With 100 applicants or so for a coal block, picking a single bidder without throwing the process open to auctions was an exercise in absurdity. To the credit of the Modi government, it put an end to blatant rent-seeking (causing a present and future revenue loss of ₹1.86 lakh crore, according to the CAG) and introduced bidding in coal in one stroke. Today, with the kingpins of Coalgate being brought to book and the allotment process behind us, it is also time to take stock of how the coal sector is faring.

The macro reality has changed sharply over the last decade with a situation of coal deficit, which led the coal mafias to thrive, being replaced by one of tepid coal demand. Some of the promises of the auction process, such as higher revenue realisations, have not materialised. While the first two rounds of bidding in February and March 2015 showed a high level of competitive interest with an average of about 15 bids per captive block, this fell rapidly to just three in August 2015, while the process was cancelled in January 2016 and thereafter for lack of sufficient bids. Eight blocks were allotted to PSUs in 2016. The bidding process marks a huge step forward from the Coalgate years, but a lot of necessary information, as pointed out by sector analysts, is not placed in the public domain — for instance, the coal blocks allotted to government companies; end-use plants; and power tariff determination produced from such blocks.

The coal sector remains uncompetitive and in the control of Coal India, whose pricing is opaque. Despite coal availability, end-users do not benefit in terms of cheap tariffs. Commercial mining of coal has not taken off as the conditions favour CIL. Coal is being beaten back by the rise of renewables as the energy of the future. Post Coalgate, coal reforms need a relook.

comment COMMENT NOW