DNA reported that Public sector undertakings have been using JV as a facade to illegally give away coal blocks to private companies and the coal ministry has chosen not to take action against such PSUs for years though the matter was brought to its notice.

As per report, everyone involved has given this scandal a silent burial now that the nation’s attention is focused on the prime minister’s office and the ministry over allegations of irregularities in coal block allocations.

The modus operandi was simple: state and central PSUs apply for coal blocks once allocated the blocks are transferred in the name of private companies by going into JV with them.

In all instances, the private companies are the majority shareholders in contravention of the Coal Mines Nationalization Act, 1973, that makes it mandatory for a PSU to hold at least 51% of the JV’s shares.

A Hyderabad based mining company’s CEO explained the process to DNA. Getting coal blocks directly is slightly difficult. But all problems vanish the moment we get into a JV with a PSU which would easily get a coal block allocated by the ministry.

His company has been trying for 2-3 years to get the National Thermal Power Corporation’s help. Of course, we have to offer something to the PSU bosses. While the CEO was reluctant to go into the specifics of the offer he said it had to be something in cash or in kind.

The ministry allocated a coal block to the Orissa Mining Corporation Limited in 2003. OMC promptly transferred the block to Sainik Mining and Allied Services Company by entering into a JV with it. SMASL holds 74% of the shares, a clear violation of the coal mines act.

All the ministry did was to ask OMC to increase its stake in the JV to at least 51%. Though OMC never complied with the order, the ministry took no action.

Source - DNA Iindia.com

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