Thursday, 26 July 2012

Why is energy starved India exporting coal to China and Japan?


Just a few months after the story of the coal mining fraud broke comes another shocker: the Government of India, facing an acute shortage of power, is nevertheless allowing the export of millions of tonnes of precious coal to Japan and China- in a period when its imports have gone up nearly fivefold. Official figures from the Coal Ministry's Coal Controller’s Organisation reveal that more than 20 million tonnes of coal- worth about Rs 4000 crore- has been exported over the last ten years; coal exports jumped  50 percent in 2009-10 and a huge 83 percent  (to 4.4 million tonnes) the following year. 

In March this year, a leaked letter saw the Comptroller and Auditor General of India (CAG) accusing the Central Government of giving away Indian coal blocks to commercial companies (mining rights to deposits) in an irregular and arbitrary manner instead of auctioning them off to the highest bidder- 155 blocks were given away to 100 firms without auction between 2004 and 2009 under the stewardship of the Prime Minister. The CAG said that these were given away cheap, passing "undue benefits" to these companies. The resultant loss in what the media quickly dubbed 'Coalgate' and 'The Mother of All Scams': a staggering US $212 billion, six times the loss in the 2G scam. An emotional Prime Minister Singh- who additionally headed the Energy Coordination Committee that gave away the coal blocks "much below market value," as the CAG said, threatened to resign if any wrongdoing was proved against him.

The huge escalation in exports since 2008 is seen as suspicious by many analysts. Energy starved India (India’s import of coal has zoomed four and a half times since 2002, reaching 90 million tonnes last year) does not permit the export of crude oil and natural gas by companies producing them, they say, underlining that coal exports do not make economic sense. “While a small quantity of coal is exported from Meghalaya to neighbouring countries like Bangladesh, it is definitely surprising that India has exported coal to China. Something does not seem to be right about this statistic,” infrastructure expert Amrit Pandurangi of consultancy firm Deloitte Touche Tohmatsu India told the Business Standard.

Added Director at PriceWaterhouseCoopers Kameswara Rao, “Long-distance transport for export of Indian coal, which is characterised by a high ash content of up to 45 per cent, does not make economic sense. So, it is unlikely that any organised traders are involved in this.” 

Statistics show that more than half the coal exports passed through Panaji in Goa, although sizeable amounts have been exported from small northeastern 'ports' like Borsorah and Dawki in Meghalaya and Panitanki in West Bengal.  Interestingly, government officials have claimed ignorance of coal exports to China and Japan, while agreeing that less than a million tonnes is usually exported to Bangladesh and other neighbouring countries in any given year. One said that the Central Government has no control over the coal from Meghalaya and Nagaland in any case, as they are granted special dispensation under the Constitution.

Indian State owned behemoth Coal India Ltd might have exported a small quantity of coal, one government official told the Business Standard, “But coal having been exported to China is news to me.”


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