India's top court cancels coal allocations

Staff Writer
Columbus CEO

NEW DELHI (AP) — India's top court said Wednesday that private companies will have to return most of the coal fields allocated to them by the government since 1993 under a corruption prone bidding system.

The Supreme Court's order comes a month after it declared that all the government allocations of coal reserves from 1993 to 2010 were carried out under procedures that were arbitrary and lacked fairness and transparency.

A three-judge bench led by Chief Justice R.M. Lodha said the companies must relinquish the coal fields, some of which remain unmined, by March next year.

About 218 coal blocks, or areas of unmined reserves, were allocated to companies for use in power plants and steel and cement factories between 1993 and 2010. The court exempted four blocks from Wednesday's order: two operated by Reliance Power and one each by state owned companies NTPC Ltd. and Steel Authority of India Ltd. The exempted mines feed coal-fired power plants that are crucial to meeting India's energy needs.

The court's ruling extends beyond the initial "Coalgate" case in which the previous Congress party-led government was accused of costing the treasury more than $200 billion by selling or allocating about 155 coal blocks in 2004-09 without competitive bidding.

A report by the country's Comptroller and Auditor General leaked to the media in March 2012 estimated those losses to have been around $210 billion.

The court order also directed companies which didn't mine their allocated coal fields to pay compensation to the government for losses to the treasury. It accepted the findings of the Comptroller and Auditor General that a loss of 295 rupees ($4.84) per ton was caused by the mines not being utilized.

The scandal, along with other high-profile cases of alleged graft, was a key reason for the Congress party's huge loss in this year's elections to Prime Minister Narendra Modi's Bharatiya Janata Party.

The court said in its ruling in August that between 1993 and 2010 there was "no fair and transparent procedure" in the coal allocation process, "resulting in unfair distribution of the national wealth."