Centre Wrongfully Excluded Bengal From Coal Auction, Benefiting RP Sanjiv Goenka Firm: The Reporters' Collective

The Centre illegally denied West Bengal its right to bid for the 83-million-tonne Sarisatolli coal block during the inaugural auction of coal mine blocks in 2015, the documents reviewed by The Reporters’ Collective brought this disturbing revelation to light on Monday. This denial facilitated a collusion with a RP Sanjiv Goenka Group company to manipulate the auction process, the Collective’s report said. Upon detection by the government”s auditor, the Comptroller and Auditor General (CAG), the government accepted West Bengal”s eligibility to bid but defended the tainted auctions.

Despite West Bengal”s vocal opposition to what it perceives as financial strangulation by the central government, this evidence reveals that state resource allocation was subject to arbitrary decisions from the outset, in contravention of the Supreme Court”s mandate for fair and competitive auctions.

In August 2014, the Supreme Court deemed the allocation of 204 coal blocks to be arbitrary and illegal. It highlighted the government”s historical practice of granting coal blocks without transparent bidding processes, resulting in the undervaluation of national assets. The top court mandated the cancellation of licenses and imposed penalties, including an additional levy of Rs 295 per tonne of mined coal.

Subsequently, the Union government enacted the Coal Mines Special Provisions Ordinance, offering two avenues for coal block allocation: through auctions or direct allocation to government-owned entities. However, the discretionary power of the government in determining which mines would be auctioned and which would be directly allocated persisted, perpetuating concerns regarding transparency and fairness, the report said.

Furthermore, the ordinance introduced complexities for companies seeking to participate in the new regime. Prior to bidding for any blocks, companies were required to settle the additional levy imposed by the Supreme Court, presenting a significant hurdle to participation in the auction process.

Government-owned companies, which were allocated blocks between 1993 and 2011, let private miners extract coal from these blocks under lease agreements. However, a crucial question arose: who bore the responsibility for paying the imposed levy — the government-owned entity or the private miner who conducted the extraction?

Initially, the Coal Mines Special Provisions Ordinance left this issue ambiguous. Recognizing the need for clarification, internal deliberations ensued within the government. After consulting the Attorney General of India, Mukul Rohatgi, the government decided if a mine had been leased to a private miner, the liability for the levy fell upon the miner, not the original government-owned company.

Subsequently, a second ordinance was issued on December 26, 2014, including this clarification. Without delay, the tender document for auctions, along with the list of coal mines slated for auction, was released the following day.

Among the entities seeking participation in the auctions was the West Bengal Power Development Corporation Limited (WBPDCL), eyeing two mines in the state. One of these was the Sarisatolli coal block. This mine, which had a reserve of 83 million tonne of coal reserves, was previously allocated to the RP Sanjiv Goenka Group-owned Calcutta Electricity Supply Corporation (CESC), before being invalidated by the top court alongside 203 others. The CESC with diverse interests, including power, IT, education, retail, and media, held significant stakes in the block.

The other block WBPDCL aimed to bid for was the 48.4 million tonne Trans Damodar block. Eventually, another government-owned firm secured this block in the auctions.

However, the Union coal ministry disqualified WBPDCL on February 26, 2015. The ministry”s committee cited the firm”s failure to deposit the levy within the stipulated timeframe as grounds for disqualification, categorising it as a “prior allottee.”

While it”s true that WBPDCL was allocated five mines under the previous regime, it”s essential to note that it had leased all five to a joint venture with a private entity, EMTA Coal Limited. Following the advice of the Attorney General and the subsequent ordinance clarification, the responsibility for paying the additional levy rested with EMTA Coal Limited, not the West Bengal government”s corporation.

The decision made by the Union coal ministry starkly contradicted the principles laid out in the recently enacted Coal Mines Special Provisions” second ordinance. Adding to the perplexity, the ministry allocated six mines to the state corporation through direct allocation, a move seemingly incongruous with its own logic. By the ministry”s own standards, the corporation should have been disqualified from these allocations.

This decision had significant repercussions, particularly for the West Bengal Power Development Corporation, as it effectively barred them from participating in a crucial auction. Subsequently, the auction was won by the RP Sanjiv Goenka conglomerate, which later came under scrutiny for allegedly rigging the bidding process to reclaim the mining block it had lost due to the court ruling.

The irregularities surrounding the auction raised eyebrows during the subsequent CAG audit. In its 2016 report submitted to Parliament, the CAG expressed concerns regarding collusion during the Sarisatolli mine auction. Although the CAG refrained from naming specific entities in its report, internal audit documents accessed by The Reporters’ Collective in 2023 revealed the involvement of companies affiliated with the RP Sanjiv Goenka Group.

The government”s response to the CAG acknowledgment clarified that the liability to pay the additional levy did not lie with the West Bengal Power Development Corporation, making it technically qualified for the allocation process.

However, the Union government attempted to justify its actions by arguing that despite West Bengal”s exclusion, the auction process remained competitive, citing the participation of multiple qualified bidders. Nevertheless, the CAG remained unconvinced, criticizing the coal ministry for persisting with unsubstantiated arguments.

Despite these revelations and criticisms, the RP Sanjiv Goenka Group retains possession of the Sarisatolli coal block, with the Coal Ministry yet to address inquiries from The Reporters’ Collective.