For the last several years, especially starting ahead of the 2019 general elections, Rahul Gandhi has decided that accusing PM Narendra Modi of providing undue benefits to select industrialists is the best way to attack the BJP. While Rahul Gandhi has not achieved any success using this strategy, he actually lost his constituency in Uttar Pradesh, he continues to do the same. Ahead of the general elections next year, other opposition leaders also have started to use the same strategy to target Narendra Modi.
Two notable names who have been accusing PM Modi of favouring business leaders and using Ambani-Adani claims of Rahul Gandhi are Mamata Banerjee and Arvind Kejriwal, the CMs of West Bengal and Delhi. Recently the Delhi CM made such allegations in the Delhi assembly, where he accused the Modi govt of tweaking coal policies to benefit Gautam Adani.
Arvind Kejriwal claimed that a BJP leader had told him that all of Prime Minister Narendra Modi’s money was with Adani and that Modi wants to become the richest man in the world. He alleged that PM Modi is helping Adani to get businesses because it is his money used in the corporate house. Speaking in the assembly, the CM said, “PM is less educated and does not understand things properly. This is worrisome.”
He claimed that recently all state governments have received an order from the central govt asking to import 10% of the total coal requirement in the states. He alleged that states are forced to mandatorily import 10% even if they do not require it, and this means states will have to buy imported coal from Adani, because as per him, “Aur Import kewal Modi jee karte the, Adani karta tha” (and only PM Modi and Adani import coal).
‘This means you will have to compulsorily purchase 10% coal from Adani even if you do not require it,’ he said. Kejriwal then added that domestic coal is available at Rs 2000 per ton, while imported coal costs Rs 20,000 per ton. “That means you will have to buy coal at 10 times the price from Adani, which means from Modi jee,” he added.
Arvind Kejriwal then alleged that while Supreme Court has ordered coal mines can’t be allocated to private companies, govt has made an exception for Adani and allocated the company coal mines. He then went on to add that ‘govt has declared that coals below 4000 calories will be considered rejected products, whereas it is considered the best coal’.
‘He is getting this rejected product for free’, the Delhi CM claimed. “Therefore, every year Modi jee takes away at least Rs 2800 crore. Every year Modi jee takes away coal worth Rs 2800 crore from our mines”, Arvind Kejriwal claimed in Delhi assembly.
He also claimed that Adani group’s projects in Sri Lanka and Bangladesh have actually been taken up by Modi himself. Kejriwal went on to claim that BJP govt has looted more in 7 years than what the Congress had looted in 75 years. This caused a huge uproar from BJP MLAs in the house, who demanded discussion on the corruption cases that have emerged in various department of the Delhi govt.
Just like Arvind Kejriwal cited big numbers and accused Narendra Modi of crony capitalism like Rahul Gandhi does, his claims are also same, baseless, based on lies. For last several days, Arvind Kejriwal and the Aam Aadmi Party has been alleging that PM Narendra Modi is not educated, even after Gujarat High Court fined him for filing RTI application to get the PM’s degrees which are already in public domain. But, his claims on the coal sector reveals who lacks very basic understanding of crucial power sector.
Let’s see some of the big claims he made and how they are wrong:
10% coal import for blending
Arvind Kejriwal claimed that Modi govt has forced states to mandatorily import 10% coal, and they are forced to buy this coal at 10 times more price from Adani. This claim is misleading and false. While such a n order was issued earlier, it was withdrawn, and it had nothing to do with benefiting Adani or any particular company.
It is true that the union power ministry had asked coal-fired thermal power plants to import 10% of their total coal consumption. The reason was, India was facing a massive coal crisis at that time, and anticipating rising power demand ahead of the summer, the govt had asked the power plants to blend 10% imported coal. Initially in October 2021, the govt had asked the plants to import upto 10% coal. But in an April 2022 notification, the power ministry had asked the generators to mandatorily import 10% coal.
It was an urgent step taken at that time because the coal-based plants had coal reserves at that time for just 3 days. It was not that there was an abundance supply of domestic coal, and the power companies were forced to buy imported coal instead of local coal.
According to the Ministry of Coal, India’s coal consumption crossed a billion-tonne mark to touch 1028 million tonnes in 2021-22 from 906 million in 2020-21. To keep pace with the growing coal demands to ensure uninterrupted and affordable electricity, India produced 819 million tonnes of coal in 2021-22 and balance 209 million tonnes of coal had to be imported.
With their 688 million tonnes of coal production in 2021-22, the government of India owned Coal India and Singareni Collieries, owned by Telangana and the central govt, could not meet the country’s coal demand, therefore the govt had to rationalise the demand to prevent competition among the states. Hence, govt of India asked them to meet 10% of their coal requirements through competitively imported coal.
Notably, Coal India and Singareni Collieries are major coal miners in India. Some other state and centre-owned PSUs and a handful of private miners produce only 130 million tonnes of coal.
If 10% mandatory import was not imposed, bigger power producers like NTPC, who sign long-term supply contracts, would have purchased the entire domestic production, forcing smaller producers to rely on more imported coal which costs must more. To prevent this, the govt had distributed the burden of costly imported coal to all the producers. Notably, sometimes the price of imported coal can be up to 10 times the price of domestic coal.
The order to import 10% coal was withdrawn by the union govt in August 2022, after coal availability in the country improved. However, in January this year, the ministry again asked the thermal power generators to blend imported coal up to 6% of their requirement till September. The order was issued given the anticipated deficit in domestic production, to ensure the continuous availability of electricity.
Forced to purchase imported coal from Adani
Arvind Kejriwal claimed that by forcing power producers to import coal, the Modi govt was forcing them to purchase coal from Adani at higher prices. This is a completely false claim, as the companies were asked to import coal at completive rates, and obviously, they were not restricted to a single importer.
While Adani Enterprises participated in coal import tenders and won some, many other companies also won such tenders. Moreover, Adani actually lost some of the biggest import tenders invited by Coal India. Indonesia’s Bara Daya Energi had beaten Adani in two coal import tenders of 3 million tonnes each by Coal India in July 2022. Adani had won a 2.416 million tonne import order for Rs 4033 crore in CIL’s first import tender, but it was cancelled later as CIL didn’t issue the contract’s letter of award (LoA) to Adani. The Indonesian group was subsequently asked to supply additional coal due to the cancellation of the Adani order.
Coal India had invited import tenders after several state gencos and independent power asked it to import coals to meet the blending requirements, and all import orders were issued through a bidding process. So far AAP or Arvind Kejriwal have not alleged any irregularities in those tenders while alleging that Adani and PM Modi benefited from the imports.
If Arvind Kejriwal and AAP have any proof of tender manipulation in favour of Adani, they should come forward with those proofs in the interests of hundreds of coal traders and the general public in general. But they are only levelling allegations inside the assembly and at press conferences, without any documentary evidence.
₹2,000 per tonne vs ₹20,000 per tonne,
The third claim that Kejriwal made is that while domestic coal is available at ₹2000 per tonne, govt was forcing states to import it at ₹20000 per tonne. While it is true that imported coal costs much more, this is a highly generalised claim, and without mentioning what price he is referring to chat grade of coal, this even does not make any sense, because coal comes in various grades and their rates are different.
The reason domestic coal is cheaper is that PSU Coal India has capped its prices so that state power distribution companies can provide cheaper electricity to the general public, which also enables parties like AAP to promise free electricity. But there is no such price cap in international coal prices, therefore coal has to be imported at market-determined prices, just like crude oil.
While the prices of domestic coal are controlled under the National Coal Index (NCI) to keep the electricity tariff in check, imported coal is traded in the free international markets as per the global benchmarks such as Indonesian Coal Index, Newcastle and API4.
Despite higher prices, Indian power generators and other coal users like steel manufacturers import coal due to two reasons, shortage of availability of domestic coal, and inferior quality of domestic coal. When coal production in the country goes down, it has to be imported to keep running the thermal power generators running.
Moreover, it is well-known that Indian coal is considered inferior due to its low calorific value and high ash content. On the other hand, imported coal with higher calorific value and low ash content is priced higher. Thermal plants are built for specific grades of coal for optimum output, and for this reason, also they need to import high-grade coal to blend with domestic coal.
It is already explained above why govt had mandated 10% coal import, to distribute the burden of higher prices among everyone.
To avoid costlier imported coals, domestic production will have to up, but AAP is opposing new coal mines in election-bound states like Chhattisgarh alleging favouritism while opposing imports at the same time. While the party keeps promising free electricity everywhere, its policy on coal production and import is problematic.
Allocation vs Auction
Another baseless claim that Kejriwal made was that despite the Supreme Court prohibiting the allocation of coal mines, the Modi government made an exception for Adani, and allowed the company to look ₹2800 crore per year. While it is true that Supreme Court has prohibited the government of India from allocating coal blocks to private firms, Arvind Kejriwal smartly didn’t mention that this does not stop the govt from auctioning coal blocks.
During the previous UPA government, coal blocks were allocated to private companies on a nomination basis instead of competitive bidding, which resulted in the coal allocation scam or the Coalgate. After the scam broke out, the Supreme Court cancelled 214 of the 218 coal blocks allocated by successive governments since 1993.
Narendra Modi government has not allocated a single coal block as alleged by AAP, but there have been multiple auctions in the past couple of years to attract private investment in the coal sector to meet the growing electricity demand of the country. So far, the government of India has allocated 93 coal blocks in six tranches of auction held so far and has invited competitive bids for auction of 101 more blocks.
Several companies have won these auctions, and the likes of Jindal, Vedanta, major cement and other energy intensive companies have won the majority of blocks, Adani has won barely half a dozen blocks.
It is notable that even though Adani has won some coal blocks, power companies and state governments are not forced to buy coal from them. Instead, AAP governments in Delhi and Punjab can participate in the auctions to have own supply of coal to produce electricity.
Coal grades
The Delhi CM further claimed that coal below 4000 Kilo Calorie per Kilogram is considered the best in the world, alleging that govt was giving Adani such coal for free. This is also a completely false claim, a calorific value of 4000 is actually almost half of the value of high-grade coal. According to the Coal Ministry’s gradation of coal, coal with over 7000 K.Cal./Kg. value is considered grade 1. After that 6700 to 7000 is grade 2, 6400 to 6700 is grade 3, and so on.
Coal with a calorific value of 4000 and less is placed in grade 12 and lower. More the calorific value, more the thermal power produced by the fuel, therefore, coal with 4000 K.Cal./Kg. value is not best quality as claimed by Arvind Kejriwal. It is actually considered low-grade coal. Coal with 5,800 Kcal/kg or higher calorific value is high-grade coal.
Coal rejects from Chhattisgarh
Coming to the claim that Adani has been allowed to take coal with 4000 Kcal/kg calorific value for free, it is also false and misleading. While it is true that Rajasthan Rajya Vidyut Utpadan Nigam requires that coal supplied by Parsa Kente Collieries Limited, a joint venture between the state govt power company and Adani, has to be above this calorific value, it does not mean the coal with lower grade is considered waste and given away for free to Adani.
Parsa Kente Collieries mines coal at coal mines in Chhattisgarh which have been specifically allotted for power production in Rajasthan. Due to the requirement that coal supplied must be above 4000 Kcal/kg in calorific value, the company runs the lower grade coal through a process known as washing, where the ash content in the coal is reduced. The higher the ash content in coal, the lower the calorific value.
Therefore, the company increases the calorific value of the coal by washing the coal and reducing the ash content as required by Rajasthan. The washing process generates coal reject, coal mixed with high ash content, which is considered a waste product. As this coal reject can’t be used in Rajasthan’s power plants, the company has been allowed to sell this, as the waste product must be removed from the mining site.
Some power plants buy these cheap coal rejects to blend with high grade coal. Power plants run by Adani group also purchased such coal rejects from Parsa Kente at lower prices. The company didn’t get the coal for free, it paid the price for coal rejects which is lower than normal coal prices.
The amount of ₹2,800 crore a year has been arrived at by using the quantity of this coal rejects transported from the mines, using Railway freight data. But to do that, the rate of domestic coal has been used, giving a much higher amount. The price of coal reject is much lower, as its ash content is high and therefore the calorific value is low. Therefore, Adani group is not earning ₹2,800 crore a year from coal rejects, the amount will be much lower.
It is notable that till 2 years ago, washing of coal was mandatory in India due to high ash content in Indian coal, as it causes more air pollution. The govt did away with the mandatory requirement in 2020. But Parsa Kente needs to wash the coal due to Rajasthan’s requirement of coal with above 4000 K.Cal./Kg calorific value.
