How UPA Govt took coal blocks from Coal India and gave to companies for captive use

The sad story of India’s Coal public sector company – Coal India is pretty damning and depressing.

While Dr. Manmohan Singh keeps coming up with cuter faces and alibis behind his screwing up of the CoalGate, he and his coterie has been instrumental in messing up Coal India’s production for the multi-million dollar gains!

Here is the sad story of CIL and how this Government has deprived this organization to distribute the coal blocks for free to companies for captive use!

While it is plagued by internal inefficiencies, the stagnation of CIL’s production at 431 million tonnes (MT) a year is largely the outcome of events beyond its control. There were two ways in which CIL could have boosted production as companies began stampeding into power generation around 2006: commission new mines or extract more from existing ones.

However, CIL didn’t have too many new, explored blocks where mining could start. “We only have expansion and extension projects left,” says CIL chairman Narsingh Rao.

This is the outcome of a decision by the UPA government, in 2004, to give blocks CIL had asked for to other companies for captive use. In order to maintain production at 731 MT – the overall coal demand in 2011-12 — up to 2036-37, CIL calculated it would need 289 blocks, according to the report on coal by the government auditor.

But after the government did not assign 139 blocks to CIL, the company was left with 150 blocks. Rao says CIL sensed a production drop, and told the coal ministry in 2007 that it could not ensure linkages (essentially, commit supply to a project). “But the ministry overruled us and kept signing linkages,” he adds

Left with fewer new blocks, CIL had to expand production from existing blocks. According to Rao, CIL’s blocks in North Karanpara, Mand-Raigarh and Ib Valley can produce a cumulative 250 MT of coal every year.