NEW DELHI: Just a day before the Election Commission was set to issue the notification for the 2009 general election, the United Progressive Alliance-I government had hurried to allocate large captive coal blocks to the Tata-Sasol combine and Jindal Steel and Power (JSPL) for their respective coal-to-liquid projects in Orissa, which resulted in an aggregated windfall gain of R54,000 crore to the two companies, according to a draft Comptroller and Auditor General of India report.
While the “North of Arkhapal” block was allocated to Strategic Energy Tech Systems, the 50:50 joint venture between the Tata Group and Sasol Synfuels, JSPL was awarded the Ramchandi block. The blocks are estimated to have coal reserves of 1,500 million tonnes each. As per the CAG’s preliminary estimate, the windfall gains (“unintended benefits”, as the auditor qualified later) to the Tata-Sasol consortium and JSPL were R33,060 crore and R21,226 crore, respectively.
Debasis Ray, chief of group corporate affairs & media, Tata Sons, in a reply to a query from FE said: “The company received the coal block following due processes laid down under prevalent government policies. We do not have any other comment to make.” An email sent to JSPL remained unanswered.
The way the UPA-I government rushed to allocate the blocks to the two companies raises many uncomfortable questions. It allocated the blocks to the companies on February 27, 2009, a Friday, while the Election Commission issued the notification for Lok Sabha elections on March 2 (Monday).
Considering that the Mines and Minerals (Development and Regulation) Bill amendment that proposed auctioning of mineral resources including coal blocks was before Parliament at that time and that the standing committee on steel and power had submitted its recommendations on the same, the alacrity on the part of the government to allocate these blocks looked dubious, analysts said.
The CAG has estimated in the draft report on performance audit of coal block allocations that several private and public sector companies reaped windfall gain to the tune of Rs 10.7 lakh crore between 2004 and 2009 because of the government’s failure to adopt the auction route for allocation of the blocks. The CAG later said these were preliminary observations and were subject to change.
Converting coal to a liquid fuel (CTL) — a process referred to as coal liquefaction — allows coal to be utilised as an alternative to oil.
An array of products can be made via these processes – ultra-clean petrol and diesel, as well as synthetic waxes, lubricants, chemical feedstocks and alternative liquid fuels such as methanol and dimethyl ether (DME).South Africa has been producing coal-derived fuels since 1955 and is only country to have commercial coal to liquids industry in operation today.
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