KPCL faces CBI probe over deals

The CBI has registered a fresh case in the coal block allocation scam against unknown officials of Karnataka Power Corporation Limited (KPCL) and others on charges of ignoring joint venture (JV) conditions to allow private partners to gain illegal monetary benefits.

This is the 39th case in the coal scam and those booked face charges of cheating and corruption. Those named in the FIR include Bangalore-based Karnataka EMTA Coal Mine Limited, Kolkata-based Eastern Minerals & Trading Agency (EMTA) and Gupta Coal Fields and Washeries Limited (now known as Gupta Global Resources Pvt Limited). Searches were conducted at one location each in Bangalore, New Delhi, Kolkata and Nagpur in connection with the case.

The case pertains to KPCL officials showing undue favour to EMTA and Gupta company by “deliberately ignoring and overlooking” the condition of JV relating to certification of the quality of coal by an independent agency. “Further, the JV company Karnataka EMTA Coal Mine Limited, in conspiracy with the private company engaged in washing of coal, had, in violation of the Coal Ministry guidelines relating to rejects generated by the washery, sold the rejects without the Ministry's permission,” the CBI said.

The KPCL was allocated six coal blocks — Kiloni, Manora Deep, and Baranj I-IV — located in Wardha Valley region of Maharashtra in 2003 under NDA government and these were among the 214 blocks whose allocation the Supreme Court had cancelled.
Questions were also raised earlier about the JV agreement with EMTA where the latter was given Coal India price for the coal mined by it for KPCL and not on cost-plus basis. This meant that whenever Coal India increased the price, EMTA could also increase price though it was not incurring any extra expenditure on mining.

Experts had also pointed out that Coal India has underground and opencast mines and it sets the price by calculating the average cost of coal extraction. KPCL had surface mines and the charges for it were less compared to mining in underground mines.

The CAG report had then said that the payment for the coal was made at a higher rate, which was determined presuming higher grade of coal at the time of tendering itself when the coal blocks were not even allotted. “Later events showed that quality of coal in the mines allotted was inferior. The estimated undue financial gain to EMTA, on the supply of lower grade coal during the period of five years, was Rs 187.87 crore,” it had said.

Though the Karnataka EMTA Coal Mine Limited, the JV company, was formed in September 2002 with KPCL having 26 per cent stake in it, the Coal Ministry allocated the six blocks in November 2003 only. S M Krishna-led Congress government was in power in the State then.