Coal allocation scam or Coalgate is a political scandal concerning the Indian government's allocation of the nation's coal deposits to public sector entities (PSEs) and private companies by Prime Minister Manmohan Singh.
The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to. As a result both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the allocatees was 1067303 crore(US$160 billion). The CAG Final Report tabled in Parliament put the figure at 185591 crore (US$28 billion) On 27 August 2012 Indian prime minister Manmohan Singh read a statement in Parliament rebutting the CAG's report both in its reading of the law and the alleged cost of the government's policies.
The essence of the CAG's argument is that the Government had the authority to allocate coal blocks by a process of competitive bidding, but chose not to. As a result both public sector enterprises (PSEs) and private firms paid less than they might have otherwise. In its draft report in March the CAG estimated that the "windfall gain" to the allocatees was 1067303 crore(US$160 billion). The CAG Final Report tabled in Parliament put the figure at 185591 crore (US$28 billion) On 27 August 2012 Indian prime minister Manmohan Singh read a statement in Parliament rebutting the CAG's report both in its reading of the law and the alleged cost of the government's policies.
The coal allocation process
“In July 1992 Ministry of Coal, issued the instructions for constitution of a Screening Committee for screening proposals received for captive mining by private power generation companies.” The Committee was composed of government officials from the Ministry of Coal, the Ministry of Railways, and the relevant state government. “A number of coal blocks, which were not in the production plan of CIL and … SSCL, were identified in consultation with CIL/SSCL and a list of 143 coal blocks were prepared and placed on the website of the MoC for information of public at large. Companies could apply for an allocation from among these blocks. If they were successful, they would receive the geological report that had been prepared by the government, and the only payment required from the allocatee was to reimburse the government for their expenses in preparing the geological report.
Allegations against S Jagathrakshakan
In September 2012, it was revealed that Subodh Kant Sahay, Tourism Minister in the UPA government sent a letter to prime minister Manmohan Singh trying to persuade him for allocation of a coal block to a company, SKS Ispat and Power which has Sudhir Sahay, his younger brother, as honorary Executive Director. The letter was written on 5 February 2008. On the very next day, (PMO) sent a letter to the coal secretary on 6 February 2008, recommending allotment of coal blocks to the company.[ However, Sahay denied these allegations, citing that the coal block was allocated to SKS Ispat, where his brother was only an "honorary director".
On 15 September 2012, an Inter Ministerial Group (IMG) headed by Zohra Chatterji (Additional Secretary in Coal Ministry) recommended cancellation of a block allotted to SKS Ispat and Power.
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