Coal India pact with 11 companies under vigilance lens

New Delhi, Feb 4: Coal India Ltd (CIL) has gone out of its way to sign fuel supply pacts with 11 companies, including alleged Coalgate beneficiaries, even before these firms reached the qualifying milestones such as acquiring land, the state-run monopoly's internal anti-corruption watchdog has said.

In a report to the coal ministry, a copy of which is available with TOI, CIL's CVO (chief vigilance officer) Manoj Kumar said supply pacts for 5,935 mw — or one-and-a-half times of the national capital's daily requirement — have either been inked or cleared for signing in spite of "deficiencies in documents".

A fuel supply agreement (FSA) holds the key to disbursal of institutional funding for power projects. Lenders do not release money till a project arranges assured fuel supply. That's why Coal India's LoA (letter of assurance) to promoters lays down clear milestones to check fly-by-night operators or diversion of funds.

Coming at a time when the Public Accounts Committee (PAC) and the Supreme Court are looking at the comptroller and auditor general's ( CAG) report on coal block allotment — which has come to be known as the Coalgate report — the vigilance report indicates how CIL has failed to get the message against giving undue benefit to corporate houses.

The vigilance report found three broad categories where terms of signing FSAs have fallen short. One where the project is yet to acquire land or complete the transfer. Two, where promoters are yet to arrange financing for the project or achieve financial closure; and three, where a case has been referred back to CIL over commitment guarantee.

Eight private sector projects figure in the vigilance report. Three of them — the Adhunik, Tata and SKS groups — also figure in the Coalgate report's list of coal block allottees. Reliance Power's Rosa power plant too is among the 11 FSAs under vigilance lens.

The federal auditor's report on the Sasan ultra-mega power project — being built by Reliance Power in public partnership — had said the company benefited from the government's decision to allow diversion of surplus captive coal.

There are three projects that are being promoted by central generation utility NTPC, DVC (formerly Damodar Valley Corporation) and UP Power Corporation Ltd.

Report just 'nitpicking'

Executives of CIL and some of the identified companies dismissed the vigilance report as "nitpicking". "You know how vigilance works. There are public sector companies also in the list. But, of course, we are looking at the report," a senior CIL executive said on condition of anonymity.

Other CIL executives said the discrepancies pointed out in the vigilance report were "procedural" matters. "In some of these cases, promoters have given provisional letters from lenders and such like. These are ongoing processes," another senior CIL executive said.

The executives clarified that about half of these pacts were signed before the initiative taken by the Prime Minister's Office (PMO) to resolve issues regarding fuel supplies to the power sector. The LoA route introduced in the new coal distribution policy of 2007 provides for assured supply of coal to developers, provided they meet stipulated milestones.