CAG finds Rs 9,000 cr scam in Odisha; says 17 mining companies made undue gains
The Comptroller & Auditor General of India (CAG) has found massive irregularities in Odisha’s mining administration which caused the exchequer losses to the tune of R9,000 crore.
In its latest performance audit report on the revenue sector tabled in the state
Assembly recently, the top auditor said as many as 17 mining companies made undue gains on account of the irregularities.
According to the report, manipulation of the state’s Integrated Mines & Minerals Management System (i3MS) caused a loss of about R659 crore.
The i3MS system is touted by the Odisha government as one of the best IT-enabled tools in the country to check all illegal transactions in the mining sector.
Saying the objective of the i3MS was to curb illegal mining by end-to-end tracking of mineral movement/ transportation, the CAG has observed that the purpose could not be achieved due to several deficiencies such as non-update of transportation made through offline e-passes, absence of internet connectivity and non-integration of weigh-bridges with the system.
As against 43,464 e-permits for 188.60 million tonne iron ore and manganese ore, e-passes for only 19,053 permits for transportation of 88.39 million tonne were available in the database, indicating inadequate end-to-end tracking of transportation of minerals.
http://www.financialexpress.com/economy/cag-finds-rs-9000-cr-scam-in-odisha-says-17-mining-companies-made-undue-gains/396501/
Govt raises coal sale cap for small, medium firms to clear glut
ndia has more than doubled the amount of coal small and medium companies can buy as the country aims to boost domestic sales of the fuel to reduce a glut.
The cap was raised to 10,000 metric tons a year, from 4,200 tons set almost nine years ago, the coal ministry said in a notice dated on Tuesday. The new guidelines also allow any company, regardless of size, to buy up to the maximum amount, which broadens the number of potential customers, S.N. Prasad, marketing director at state-run miner Coal India Ltd., said by phone.
“Some of the consumers have grown bigger and are no longer small or medium companies,” Prasad said. “The change in the definition would allow them to buy.”
Kolkata-based Coal India is struggling to sell all its output as it seeks to achieve a government-set goal of raising annual output to 1 billion tons by the end of the decade. Demand growth has been slack as power plants, which bought about 75% of the miner’s output during the last fiscal year, are running below capacity.
Coal India, which produced 539 million tons last year, also said on Tuesday that it plans to sell an additional 20 million tons of the fuel in spot auctions during the current fiscal
Coal Ministry shelves plans to auction of coal blocks in near future
With coal production hitting all time high and demands remaining feeble, the government has decided to shelve plans of auctioning of coal blocks in the near future.
Senior officials in the Coal Ministry said, “At present, the situation is not right for auctioning of coal blocks. Since there were very limited takers during the previous round of auction, therefore, we have shelved it for a while. We will wait till the market conditions become conducive for auctions.”
In its efforts to fuel the rapid expansion for generating power, the government had set a massive target of producing one billion tonnes of coal by 2020. This was estimated keeping in mind, the demand for power generation of the fuel at a level of 8-9 percent annual growth. But since the actual growth of the power generation has been only 4 percent, there has been a situation of excess production in the country.
Coal Secretary Anil Swarup had said that, currently, all power plants are ample quantities of coal. Even, more than 20 million tonnes of coal has started coming out from 13 of the 29 mines auctioned so far. By March 31, the rest of the mines would also start producing.
Debasish Mishra, partner-consulting, Deloitte Touche Tohmatsu India said, “The demand from power generation companies is not keeping up pace with the increase in coal production."
The government has so far allocated 75 coal mines for specified end use, including 31 through auction and 44 through allotment to public sector units. Piyush Goyal, minister of coal, power and mines had earlier said that the government expects to earn revenue of these mines to the tune of around Rs 3.53 lakh crore during the life of mines.
The country’s largest coal producer Coal India Limited has known to build up huge inventor, as it reported a record production of 536 million tonnes during FY15-16, 42 million tonnes more than the previous year, growth of 8.5 percent.
But with demand tapering, CIL had started building huge inventory that has forced them to explore other markets to export. However, inventory of CIL has started coming down. The idle inventory was to the tune of 55 million tones on March 31, which has now come down to around 40 million tones.
It is learnt that, CIL is also exploring opportunities to export the fuel to Bangladesh. However, Swarup added, “Most of the demand for coal comes in the second half of the year. We will export only when our domestic requirements are fully met and then we are left with the fuel.”
Meanwhile, the government auditor Comptroller and Auditor General of India (CAG) had pointed serious holes in the e-auctioning process of the coal ministry. The CAG said that the competition may have been restricted in auction of 11 coal blocks on account of multiple bids by corporate groups made through joint ventures or subsidiaries.
However, official sources said that the deficiency stated by the audit body is non-considertaion of indirect taxes as these mines were for ‘captive use’. “There was no sale of coal, no sale revenue and therefore no indirect taxes payable,” sources added.
Bangladesh thinks the best place to build a coal power plant is next to the world’s largest mangrove forest
A controversial new coal power plant being built in Bangladesh is already running out of friends. Environmentalists worry it will spell disaster for the world’s largest mangrove forest, while locals worry about pollution and being driven from their homes. The vast majority of Bangladeshis have been critical of the project since its inception in 2010. Even the business case seems to be falling apart, as costs mount and international investors pull out. So why is it still being built?
Rampal, a 1320MW coal power station, will be big enough to provide around 10% of the country’s electricity generation. It’s scheduled to be operational from 2020. The project is owned jointly by Bangladesh and India’s state-owned energy utilities, which each have 15% equity, while the remaining 70% of the total funding is expected to come from bank loans.
The first and most obvious problem with Rampal is its location on the edge of the Sundarbans, a large, dense mangrove forest that straddles the Bangladesh-India border. The forest is a UNESCO world heritage site and hosts endangered species such as river dolphins and Bengal tigers which will see their habitat damaged if the plant becomes a reality.
Environmental groups claim the outer edge of the project is within a 14km radius of the forest, thereby breaking Bangladeshi forest laws. Each year, nearly 5m tonnes of coal will have to be shipped to the plant along the Poshur River, which cuts across the Sundarbans and will need to be dredged. There is a real danger of coal-carrying vehicles scattering large amounts of fly ash, coal dust, sulphur and other toxic chemicals.
Reports by NGO network Banktracks, anti-coal think-tank IEEFA and UNESCO claim the project takes no account of the potential for industrial accidents, transportation incidents, tidal waves and regular cyclones.
Human rights agencies have also raised concerns about the displacement of families and the occupation of land in adjacent areas. Fishermen, woodcutters and honey collectors have already lost their livelihoods as a result of displacement and encroachments onto their lands.
The above concerns are further compounded by the proposed technological and risk management plans. The plant is set to use outdated supercritical (SC) technology, which skips the water-boiling phase of conventional coal-fired generation but has since been superseded by the more modern and efficient “ultra-supercritical” (USC). Contrary to the claims of the Bangladeshi government, this is bound to produce high levels of carbon dioxide and waste-water discharges. It is also likely that Rampal will in fact be run using poor quality coal imported from India, which spits out lots of ash without creating much energy.
A Banktrack report suggests that the project fails to comply with even the minimum environmental and social norms established under the “Equator Principles”, which more than 80 major international financial institutions have signed up to. Consequently foreign banks have shown no interest in financing the project.
Given this, the Indian government arranged financing through its state-owned EXIM Bank at an effective interest rate of 5.2%. That’s much lower than market rates in India. However it’s still not an attractive deal for Bangladesh which could usually get a better rate from one of its “development partners” – richer countries such as Norway or Japanwhich have built close ties with the country.
Nevertheless, this is not a project in which development partners in Bangladesh are prepared to invest. The Norwegian Pension Fund, for instance, the world’s largest sovereign wealth fund, pulled out citing serious environmental and human rights concerns.
The cheap loan below the market rate means the Indian taxpayer is effectively due to pay US$988m throughout the project, while the Bangladeshi taxpayer will pay even more: US$936m in tax breaks and US$1.87 billion for river dredging throughout the project.
In order to recover the subsidies and costs, the Rampal power plant will require a standard tariff of Tk9.54/kWh (US12.1c/kWh). Environmentalists claim that alternative power sources, such as solar panels, cost much less than this. This tariff may even be an underestimate, given it is based on the plant operating at 85% capacity (when a Chinese coal plant typically operates at 50-60%) and doesn’t account for the coal market. Rampal electricity would become even more costly if coal prices rose.
Rampal faces national and international resistance, and overwhelming financial and environmental concerns. So why are the ruling regime of Bangladesh and the Indian government continuing to push for the project?
Many Bangladeshis are wondering whether the Rampal project will open up markets for low-energy Indian coal, and whether this might be used as a political tool by an Indian government seeking influence in its neighbour. Whatever the consequences for future regional politics, this project will not only cause environmental and human rights disasters, but is also destined to create a financial nightmare for Bangladesh.
Warm Regards
Anurag Singal
Sr. Manager-Business Development
EMIL, Aditya Birla Group
+919088026252, 033-30518415
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