Coalgate 2.0

The Adani Group reaps benefits worth thousands of crores of rupees as the coal scam continues under the Modi government

01 March 2018
Parsa East and Kanta Basan, a coal block in Chhattisgarh, is allotted to Rajasthan Rajya Vidyut Utpadan Nigam Limited. It is being managed by a joint venture between RRVUNL and Adani Enterprises Limited, and AEL also runs mining operations at the block.
ALOK SHUKLA/CHATTISGARH BACHAO ANDOLAN

WHEN THE SUPREME COURT, in a landmark decision in September 2014, cancelled nearly all existing permissions for the captive mining of coal blocks, it was seen as having halted the “Coalgate” scam. State-owned enterprises and private companies across the country were compelled to dissolve partnerships that most often favoured the corporate purse over the public good. Those state-owned enterprises that subsequently reapplied for permissions had to operate under a new law that restricted private firms to the role of contractors. None were allowed to carry on with things the way they were—with just a single exception.

The partnership between the Rajasthan Rajya Vidyut Utpadan Nigam Limited, a power corporation of the Rajasthan government, and Adani Enterprises Limited, the flagship company of the Adani Group, continues on the basis of agreements that pre-date the Supreme Court ruling. In Chhattisgarh, a joint venture formed by the two entities in 2007 is exploiting a captive coal block called Parsa East and Kanta Basan. The terms of the joint venture give the Adani Group effective control over it. Numerous other arrangements regarding the block also violate the 2014 ruling, as well as later laws and guidelines, and this state of affairs is clearly laid out in company documents and regulatory filings. Yet, despite the clear breach of law and contempt for the Supreme Court decision, there has been no action or complaint against these arrangements from either the Rajasthan and Chhattisgarh governments, both headed by chief ministers from the Bharatiya Janata Party, or the central government, headed by Prime Minister Narendra Modi.

RRVUNL pays the joint venture for coal from Parsa East and Kanta Basan. The pricing calculations involved in this are not normally published, but RRVUNL has disclosed pricing breakdowns from 2016. Based on the figures in these and production numbers reported by Adani Enterprises Limited, even the lowest possible estimates calculated by The Caravan show that RRVUNL will pay the joint venture at least Rs 6,000 crore—approaching $1 billion at present rates—in excess of prevailing coal prices over the 30 years that it has rights over the coal block. To add to this, arrangements for a power plant to be run at the block by the Adani Group promise the conglomerate a rock-bottom benefit on fuel of Rs 1,000 crore over the same period. By anything but the most conservative estimates, these sums are likely to be far higher.

Narendra Modi used Adani Group aircraft to travel during the campaign for the 2014 general election.
PTI

THE GOVERNMENT ALLOTTED 218 captive coal blocks to individual private and state-owned entities between 1993 and 2011. These were to funnel their allotted coal to their facilities for power generation or heavy industry—both official priorities. Instead of auctioning the blocks, the government simply assigned each one to the interested entity that it thought would put it to best use. Many of the private companies that had received leases were owned by politicians or closely linked to them, and many of the state-owned enterprises that had received them formed joint ventures with politically connected private firms to exploit their captive blocks.

Nileena MS is a reporting fellow with The Caravan. 

Keywords: Rajasthan Congress Chhattisgarh Adivasi BJP Narendra Modi mining environment Supreme Court Coalgate Vasundhara Raje Ashok Gehlot forest rights act coal Adani Group Gautam Adani
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