Home Government and Policy Business Standard's article insinuating that private entities benefit more from coal policy than consumers is flawed and ill-argued

Business Standard’s article insinuating that private entities benefit more from coal policy than consumers is flawed and ill-argued

The same author had published a sensationalist story last year on the same issue. We had published a detailed report back then debunking the claims that were made in the said piece.

Business Standard published an article recently, authored by Nitin Sethi, titled ‘NDA’s coal block policy and new regulations face critical questions’ where it was insinuated that private entities gained more from the central government’s coal policy and consumers and state governments suffered as a consequence. It was also insinuated that the private sector gained more from the ‘back door’.

The author appears to have put great faith in the newly elected Chief Minister of Chhattisgarh from the Congress party for the letter penned by the latter in which Baghel claimed that the Centre’s policy could cause a potential revenue loss of about Rs. 9 trillion over the life of the coal blocks in its territory.

The author has also put great faith in a PIL filed by one Dinesh Kumar Soni the matter of which is still being heard by the Court. A source in the Coal Ministry spoke to OpIndia.com regarding the matter and called the report ‘baseless’, ‘erroneous’, ‘full of falsehoods’ and ‘a collection of blatant misrepresentations’.

- Advertisement - - Article resumes -

The article mentions Baghel asserting that the state governments under whose jurisdiction the coal blocks fell should have the right of first refusal and have a say in the allocation of blocks to other states. The Chhattisgarh CM has also demanded that the reserved price for such blocks be increased from Rs. 100/tonne to at least Rs. 500/tonne.

Responding to these demands, the Ministry Source told OpIndia.com that the allocation criteria include the distance of end-use plant from the mine to encourage efficiency and economies through pit head generation. That is, one of the criteria for the allocation of coal blocks is the distance between the mine and the thermal power plant where the coal produced from it will be put to use. Therefore, the coal-bearing States will always benefit if any PSUs apply for a coal mine.

“In fact, out of the 10 coal mines that have been allotted in the State of Chhattisgarh, PSUs of Chhattisgarh state had applied for only 4 coal mines. Accordingly, they were allotted 3 (Extractable Reserves of 392 MT) out of the 4 coal mines for which they submitted applications. The transparent auctions and allotments have resulted in revenue of Rs 2,867 crore to Chhattisgarh compared to zero amount under the previous policy. In addition, they will also collect royalty and District Mineral Funds (DMF) from coal mined,” the source said.

As for the demand to raise the reserve price, we were told, “The demand for raising the reserve price from Rs 100 MT to Rs 500 MT is not tenable. The increase in reserve price will lead to increased electricity tariffs for consumers across the country especially farmers, the poor and middle class. It would affect the ability of State Governments to provide affordable and regular electricity across the country.”

Basically, raising the reserve price will increase the cost of electricity production. Consequently, the cost of electricity will go up for consumers and the electricity bills of customers will increase.

The article also makes the claim that “Mining companies see huge potential from the MDO route.” It also makes the assertion that the MDO business could corner 52 billion tonnes of coal reserves. In reality, under the new regulatory framework established by the NDA government, PSUs are permitted to appoint a Mine Development Operator (MDO) through a competitive bidding process in a free and transparent manner providing a fair opportunity to all. At the end of it all, the PSU still continues to be the mining leaseholder and the coal produced is entirely the property of the PSU. Therefore, it appears misguided to make the claim that MDO business could corner ’52 billion tonnes of coal reserves’.

Baghel’s primary disagreement appears to be with the government’s decision to allocate coal blocks to PSUs. The article states, “Though the initial focus was on auctions, the government has ended up with more allocated blocks (58) than auctioned ones (31). It is this allocation policy that Baghel has questioned.”

The Ministry source told us that the primary reason for this was the low response from bidders in auctions. Two rounds of auctions have apparently been cancelled due to low response. “Had the mines not been put up for allotment, there would have been a loss of revenue to Chhattisgarh State because there were few takers from the auction process. By allotting these mines to PSUs, Central Government has ensured production of coal, which has led to royalty and DMF earnings for Chhattisgarh,” the source said.

We were also told that the production of coal from allotted mines is actually higher than the production of coal from auctioned mines. And these mines are providing the local populace with plenty of economic opportunities and also assisting in the development of the area.

The same author had published a sensationalist story last year on the same issue. We had published a detailed report back then debunking the claims that were made in the said piece.

Share This Post With Your Friends & Fans:
We need your support to survive in the media industry. Please consider paying us for the content we produce:

To know more about these payments, please click here.

Don't Miss This: ECI Busts "EVM Tampering" Charges

Election Commission responds to EVM tampering charges

Most read articles recently

Here is what may have triggered Rajdeep Sardesai’s own colleague slamming him for being a pliant journalist

Anjana Om Kashyap, one of the Editors of Aaj Tak who conducted that interview interestingly took to Twitter today to castigate what appears to be her colleague, Rajdeep Sardesai.

Read this before you believe the ABP-Nielsen Exit Poll that gave NDA only 277 while others gave a thumping majority

While all other polls were giving a thumping majority to BJP and NDA, Nielsen chose to "customise" their survey and simply delete voter responses were overwhelmingly in favour of BJP.
Ravish Kumar has a mental breakdown as BJP set to form a government at centre, according to exit polls

NDTV journalist Ravish Kumar has a prolonged meltdown on his show after the Exit Polls predicted a landslide BJP victory

Most of the Exit Polls suggested that BJP may be well placed to form another government at the centre

After Anjana Om Kashyap, now Shweta Singh calls out Rajdeep Sardesai’s bias among others

Sweta Singh has called out the blatant bias in the Left media and even Rajdeep Sardesai among others.

Congress must die: Expelled AAP leader and Swaraj India President Yogendra Yadav

Yogendra Yadav said Congress is single biggest obstacle for creating an alternative

IIT graduate and an IAS officer explains in detail why EVMs can’t be ‘hacked’ or ‘tampered’ with

Bhavesh Mishra, IAS 2015 batch, B.Tech IIT Delhi, on Quora gave a detailed explanation regarding why EVMs cannot be 'hacked' or 'tampered' with.
Congress has a number of excuses lined for their predicted loss, all of them contradict each other

Congress’ new excuse for predicted loss: North Indian voters are not as educated as South Indians

Congress spokesperson Shama Mohammad stated that the reason of Congress' bad performance in North Indian states is that the people in North Indian states are 'pliable' and they are not educated like the people in the south.

‘Journalists’ now use the fall of the Left in Australia to console themselves and insinuate that Modi can meet the same fate

Shekhar Gupta has hinged his argument that exit polls are untrustworthy based on the recent Australian elections, in which conservative coalition registered a victory against popular opinion and exit polls
Subscribe to Day's Top Stories

Latest articles

Connect with us


Don't miss these

Share This Post With Your Friends & Fans: