Coal fire: 3 Tata Group firms under CAG spotlight

Tata Steel, Tata Sponge and Tata Power are among the 57 private sector companies which, according to CAG, have benefitted at the expense of the exchequer.

More than a year after the Comptroller and Auditor General of India (CAG) tabled the coal block allocation report in Parliament, indicting the government for a notional loss of Rs 1.86 lakh crore while allocating coal blocks, the Central Bureau of Investigation (CBI) has filed 14 First Information Reports (FIRs) against private sector companies, and more are in the offing.  

Tata Steel, Tata Sponge and Tata Power are among the 57 private sector companies which, according to CAG, have benefitted at the expense of the exchequer.

Tata Steel has been allotted two semi-coking coal blocks - Kotre Basantpur and Panchmo - in Jharkhand with combined reserves of 250 million tonnes.
The Ganeshpur thermal coal block, linked to a power project, with reserves of around 137 million tonnes in Jharkhand, was allotted jointly to Tata Steel and Adhunik Thermal Energy.

While Kotre Basantpur and Panchmo were allotted on August 11, 2005, Ganeshpur was allotted on May 28, 2009. However, years after the allotment, the blocks are still non-producing, primarily for want of clearances. 

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Tata Steel did not respond to questions. Its managing director, H M Nerurkar, had said last year there was no scam in coal allocation.

“There was a policy and people have followed the policy. Coal is just a pass-through. If coal prices increase, it would be reflected in power rates. What is the scam? Lots of figures are coming up, but there are many issues like lease issue and mine and environment clearances,” Nerurkar had said in August last year.

Tata Steel officials had said in earlier interactions that the public hearing for the Ganeshpur block was over, but some of the procedures were still pending, before the block was handed over to the companies. 

On the other hand, the legal formalities for the Kotre Basantpur and Panchmo had been processed by the state government and the central government's nod was awaited. The lease for these two blocks, linked to Tata Steel’s expansion of old plants at Jamshedpur, was originally with Coal India and the transfer took some time. That’s Tata Steel’s version.

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However, on November 4, 2010, the coal ministry sent a show-cause notice to Tata Steel over the inordinate delay in developing the Kotre Basantpur and Panchmo blocks.

The coal ministry’s letter to Tata Steel said that in the review meeting held on June 22 and 23, 2009, the company had assured production in December 2011.

“However, in the review meeting held on July 20-21, 2010, it was noticed that no serious efforts have been made by the company to develop the coal block, even after repeated assurances tendered by the company during the period,” the letter read. The company was asked to respond in 30 days' time, failing which the ministry had said it could face de-allocation.

Tata Sponge, in which Tata Steel has a majority stake, has already drawn flak for not meeting milestones.

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Its bank guarantee in respect of Radhikapur (East) jointly allocated to Tata Sponge, Scaw Industries and SPS Sponge Iron, was recommended for deduction last year. 

The inter-ministerial group deliberated on the presentation made by the companies and decided against deallocation of the block, but felt the bank guarantee could be deducted because of shortfall in production.

Another Tata group company whose name is doing the rounds for not meeting milestones is Tata Power. It has a joint block with Hindalco Power in Jharkhand, which was allocated on August 1, 2007. The block has reserves of about 190 million tonnes and is non-producing, according to the CAG report.

Tata Power shares another block with Monnet Ispat & Energy and Jindal Photo, which is also non-producing. The block was allocated on January 9, 2008 and has reserves of 322 million tonnes.

(This is part of a series, where we look at companies which are facing the heat from the coal scam and why.)