Govt responds to Congress allegations on coal block auctions, says auction process 'transparent'

Congress alleges violation of Supreme Court orders in coal block auctions, demands JPC investigation
Govt responds to Congress allegations on coal block auctions, says auction process 'transparent'
Govt responds to Congress allegations on coal block auctions, says auction process 'transparent'Energy Watch

New Delhi: A day after the Congress accused the Modi government of reversing the long-standing policy of competitive auction for coal block allocation, the government has issued a rebuttal, saying that the coal blocks whose allocation was cancelled by the Supreme Court in 2014 are being put on auction via a "transparent" mechanism. "Ministry of Coal has clarified that after cancellation of 204 coal mines in 2014, coal mines are being auctioned through a transparent mechanism and for various end uses – power and non-regulated sectors," said an official statement on Wednesday.

In a statement, Congress General Secretary Jairam Ramesh said that the Adani Group has been allotted coal blocks even when it has been the sole bidder or when a related party has acted as a second bidder. This, he claimed, is in violation of the spirit of the Supreme Court orders on coal block auctions. The Congress has also demanded the constitution of a Joint Parliamentary Committee (JPC) to unravel the truth.

Coal block auction

"As per the methodology for commercial coal mines’ auctions, in case of less than two technically qualified bidders for a mine, the first attempt of auction for that mine shall be annulled and the second attempt of auction may be initiated with the approval of Competent Authority. However, in case of only one bidder again in the second attempt, the matter will be referred to the ECoS (Empowered Committee of Secretaries) for appropriate decision with respect to the allocation of mine," said the Coal Ministry while explaining the process for allocation of coal mines under the commercial coal mining regime.

Till date, 11 coal mines have been allocated to different bidders with the approval of ECoS based on a single bid after the second attempt of auction, on the basis of transparency in auction, reasonability of offer and number of rounds the mines have been offered, said the ministry.  

Only one coal mine bagged by Adani Group: Coal Ministry

"From the above auctioned 11 coal mines, only one coal mine i.e. Gondbahera Ujheni East coal mine has been successfully won by the Adani Group i.e. MP Natural Resources Pvt Ltd. Other mines have also been successfully auctioned to others at the same percentage revenue share at which Gondbahera Ujheni East was auctioned," the Coal Ministry said.

The coal ministry further said that no correlation has been established between Cavill Mining Pvt Ltd and Adani Group. "Also, as per the provisions of the tender document, the affiliate shall mean, a person who, directly or indirectly controls such bidder; is Controlled by such Bidder; is Controlled by the same person, who directly or indirectly, controls such Bidder; or is an associate company of such Bidder," it said.

"In this case, it cannot be established that Cavill Mining Pvt Ltd is an affiliate of Adani Group," the ministry added.

"Furthermore, in case a misrepresentation has been found at any stage of the auction process, the Ministry of Coal has a right to take appropriate actions as per clause 5.12 of the tender document," the coal ministry said.

Why is Adani Group under scrutiny here?

The Adani Group came under scrutiny after it won the bid for four coal blocks in March, including one where the only other bidder was Cavill Mining Private Limited. A investigation revealed that Cavill Mining Private Limited is owned by Utkarsh Shah, who also promotes Adicorp Enterprises, a company Hindenburg Research said was used to move money between Adani’s companies to avoid mandatory disclosures.

Cavill Mining Private Limited and Adicorp Enterprises share the same address in Ahmedabad. Cavill, which had no mining experience and a paid-up capital of Rs 1 lakh, competed with MH Natural Resources Private Limited, a subsidiary of Adani, for mining rights to the North West of Madheri block in Chandrapur, Maharashtra. The Madheri block is estimated to hold 200 million tonnes of coal, making it a lucrative prospect for mining companies.

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The Coal Ministry’s rules state that the auction for a commercial mine, on the first attempt, is valid only if there are at least two bidders. For the Madheri block, only two companies participated in the auction process, Adani Group's MH Natural Resources Private Limited and Cavill Mining.

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