Over the past five years, Coal India's profit jumped 735% to Rs17,356 crore by just raising coal prices while employee expenses grew almost double. However, between the same period, its coal production increased by just 5%
Coal shortages have been caused mainly due to the inefficient and monopolistic Coal India Ltd (CIL), and road blocks created by Ministry of Environment and Forests (MoEF) in the development of new coal mines. Any bottlenecks in coal production has a cascading effect on all major industrial and household sectors in India, including power generation. CIL was formed upon nationalisation of coal mines with the noble purpose of increasing coal production, to provide better amenities and safety to coal miners and to provide coal to Indian industrial consumers at a reasonable price. It has largely failed in its objectives. Shockingly while CIL’s production has remained near stagnant for last five years it’s employee expenses have doubled to Rs27,320 crore.
CIL has increased coal prices by 60% in just last five years, an act of virtual extortion resulting in its profit jumping to Rs17,356 crore in 2012-13 against just Rs2,078 crore in 2008-09 (by 735%) while coal production marginally went up just 5% to 452 million tons (mt) from 431mt during the same period.
CIL’s Subsidiaries should be made independent and decoupled from it
All seven coal producing subsidiary companies of CIL should be made absolutely independent in their ownership and operations, and should be freed from the clutches of CIL. The holding and subsidiary company relationship should end and all of them can be listed on stock exchanges.
After unbundling as above, let there be healthy competition between these seven self contained independent companies on the lines of Hindustan Petroleum Corp Ltd (HPCL), Bharat Petroleum Corp Ltd (BPCL) and Indian Oil Corp (IOC).
These seven coal producing companies can jointly promote a separate company, exclusively to carry out the bulk and economical procurement of mining and other equipments on their behalf. Similarly, these companies can form a joint committee to interact with railway authorities for placement of rail rakes for smooth movement of coal.
Consultancy firm Deloitte and the 12th plan document has also recommended decoupling of these subsidiary companies but Minister of Coal on 13 February 2014 refused to accept it.
Poor quality of coal and no redressal mechanism
CIL has no proper, fair and mutually acceptable arrangement for quality testing of coal, as a result the customers are forced to accept and pay for whatever CIL dispatches, even if it is stones or mud mixed with coal. The recent tussle on the quality issue between NTPC and CIL amply proved this point.
Mystery behind allocation of coal blocks/ reserves without any consideration
It is strange and mysterious as to how huge coal reserves, limited in quantity and not replenishable, unlike air waves/spectrum, were allocated to private parties selectively without charging any consideration through an open bidding process.
The best way out of this whole messy affair and controversy is to cancel all coal allotments made from 1999 to 2012 by executive order/ordinance barring those that have already seen investment and started mining. Thereafter, CIL should reallocate the same to actual and genuine user industries in small parcels, based on their captive requirement for next 15 to 20 years through an open auction by keeping a reasonable floor price.
Once coal blocks are reallocated against payment of suitable monetary consideration, there will be urgency on the part of new coal blocks allottees to invest and start mining. The present coal blocks allottees are not serious in mining and are waiting for further appreciation in the value of their coal blocks.
Fuel Supply Agreements (FSA) are drafted in a most biased and partisan way with all terms favouring only CIL. These must be scrapped and replaced with a new one based on equity and equality.
Authority for deciding coal prices
Coal prices should be decided from time to time with a holistic approach by an independent multi-member minerals commission and not by the proposed coal regulator, which is just an advisory post with powers of fixing coal prices staying with CIL and Ministry of Coal. This will curb the sort of impunity because of which CIL had overnight increased the price of higher grade coal from Rs2,140 per tonne to Rs4,920 per tonne in a single stroke effective from 27 February 2011.
Coal mafia and organised gangs are rampant and they not only pilfer coal but also forcibly extort money from consumers. This crime has been continuing since decades and is known to everybody. The government and administration can demolish this illegal racket if there is strong determination and will.
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Building a Better India-Part1: How to create a smaller and smarter government
Building a Better India-Part2: Transforming political landscape
Building a Better India – Part 3: Bringing systemic changes in constitutional bodies
Building a Better India – Part 4: Identifying tax issues
Building a Better India – Part 5: Bringing tax reforms
Building a Better India – Part 6: Fast track clearances
Building a Better India – Part 7: Managing India's Deficit
(Kolkata-based Dalbir Chhibbar practised as a CA till 1990 and later started his own buinsess)
The proposed regulations would be applicable to employee stock options/ purchase scheme as well as on other general employee benefit schemes such as the case of accident, sickness, disability, death and scholarship funds
Market regulator Securities and Exchange Board of India (SEBI) may announce a new set of employee stock options/purchase scheme (ESOP) regulations, including purchase of shares by employee welfare trusts from the secondary market with adequate safeguards.
The Primary Market Advisory Committee of SEBI has suggested some changes and the market regulator had sought public comments on the recommendations. The final norms have been prepared after taking into account these suggestions and they would be placed before SEBI’s board on Thursday.
The proposed regulations shall be applicable to the employee stock options scheme and the employee stock purchase scheme, generally called ESOP guidelines, as well as on other general employee benefit schemes such as the case of accident, sickness, disability, death and scholarship funds.
If fresh shares are proposed to be issued against employee benefit schemes, then the company may have the flexibility of either adopting the trust route or implementing it directly, SEBI said.
In case secondary market acquisitions are proposed under the scheme, the same must be implemented through a mechanism of trust.
“The trust route provides for better governance of schemes. Considering that secondary market transactions necessitate adequate safeguards, trust route may be made mandatory for schemes to undertake secondary market transactions,” SEBI said.
The trust may hold the shares acquired from secondary market for a minimum period of six months.
However, within the said holding period of six months the trust may be allowed to tender shares in open offers, buybacks and delisting offers or any other exit offered by the company to its shareholders.
No off-market transfer may be permitted, except to employees pursuant to the scheme, the market regulator said.
To ensure “independence of trustees and to create an arm’s length relationship” in the operation of trust, SEBI suggested that a person shall not be appointed as a trustee to hold the shares if he is a director, key managerial personnel or promoter of the company or a beneficiary holding 10 per cent or more of the paid-up share capital of the company.
Those companies which have acquired shares from the secondary market in excess of the maximum permissible limits could be given a longer time period of five years from the date of notification to come down to the permissible level.
For general employee benefits and retirement benefit schemes holding more than the prescribed limit is proposed to be given more than five years period from the date of notification to reduce the same to the permissible level.
SEBI has also proposed to extend the timeline for alignment of existing employee benefit schemes with the ESOP guidelines till 30th June, this year.
Accidents, poor maintenance and now, robbery. Will Ideal Road Builders be made accountable for Pune-Mumbai Expressway as per the responsibilities levied on it?
As per information procured under Right to Information (RTI) by Moneylife, in 2011, Ideal Road Builders (IRB), the private agency in the public-private-partnership (PPP) under question, is responsible for the safety, maintenance and operation of the Pune-Mumbai Expressway (E-way). However, Sunday’s deadly and daring robbery of Pune-based Mali family on the E-way near Malavli, once again lays bare IRB’s callousness in its handling of safety. 48 hours have passed by and we have neither heard any statement from the Maharashtra State Road Development Corp Ltd (MSRDC) regarding IRB’s utter failure in ensuring safety of commuters, nor from IRB regarding an action plan to ensure passenger safety.
It is indeed ironical that when IRB took over the 15-year contract of the Pune-Mumbai Expressway in 2004, the E-way had just recovered from a series of crimes. At that time, commuters were regularly attacked by robber gangs placing boulders along the e-way to stop a vehicle. The robbers would then physically assault drivers and passengers, loot valuables like mobiles, bags and cash, and in one case also killed a young boy in his 20s. This had lead to such a fear psychosis that people hardly dared to take the e-way at night. The establishment of the Delta Force, a special security agency with former IPS officer, Vikram Bokey appointed as officer-on-special-duty, resulted in quickly curbing the road robberies. Thereafter, in 2004 IRB took over the E-way.
In Sunday’s incident, the Mali family had returned from a holiday in Thailand. Businessman Amit Mali had parked his car at his brother’s house in Mumbai. He picked up the car from there and began driving to Pune. On his way, near Malavali around 2.30am, he felt sleepy so he decided to buy water and snacks when he saw a petrol pump on the opposite side of the E-way (meaning, Pune-Mumbai side of the E-way). True, that there are boards appealing to commuters not to stop on the Expressway but it is also true that in case of an emergency or a halted vehicle, the IRB’s Patrolling team is supposed to reach the spot within eight minutes. After Mali left, a gang of robbers asked his wife and daughter, who were sitting in the car to open the window. When they refused, the robbers had the audacity to break window panes, physically assault both of them, took away Rs75,000 cash and other valuables, and ran away. Clearly, all this must have taken more than 15 minutes, but there was no sign of a patrolling team.
As per the report in Times of India, there has been a string of robberies on the E-way since April 2013. As per the report, cash and valuables were stolen by robber gangs on 12 April 2013, 25 July 2013, 27 August 2013, 9 November 2013 and 19 December 2013. This proves that despite continuous crime activity on the E-way, neither the MSRDC nor IRB bothered to step up security. When Delta Force was appointed, it was strategised that the patrolling team would consist of 80-100 security personnel, who would patrol up and down the 96 km E-way round the clock. This lasted for about three to four years, thereafter, the dilligent patrolling stopped. Apparently, the patrolling force was cut down in strength to one-third of its manpower.
The 800-odd page contract agreement copy procured under RTI by Moneylife clearly states in chapter 4, that safety, besides patrolling, accident prevention, cleanliness, fencing, road surface repair and upkeep is the responsibility of IRB for the 15-year contract period between 2004 and 2019. Besides, now the central government has issued strict directives on suo motu disclosure under Section 4 of the RTI Act, regarding putting information in the public domain through websites in all cases of PPPs. The National Highway Authority of India (NHAI) has already begun uploading contract agreements and other documents. It is high time that the MSRDC follow suit. I just went through its website www.msrdc.org and found that the information uploaded is truly pathetic.
Why should citizens continue to pay toll despite IRB not providing the mandatory services? It is time that each commuter who is a victim of robbery or road accidents file a lawsuit for heavy compensation, right from the time the E-way opened to the public. Also, it is high time that IRB be black listed. But who will bell the cat?
Here is a description of IRB's specific responsibilities (all relevant sections of the agreement are also provided) along with my observations immediately after each section (the following is a replug from a previous article):
220.127.116.11: Road Maintenance, both routine and emergency, and inspection
This includes cleaning of the road surface by a self-propelled mechanical sweeper with a vacuum system, in order to remove all the dirt, small aggregates and pieces of different material fallen on the road. Elements that cannot be removed by the mechanical sweeper will have to be removed by manual sweeping or by hand. This activity will be carried out at the time of least traffic. Cleaning of road surface will be carried out through the year. The areas where the collection of dirt is more frequent such as ear-bridge parapets, underpasses, etc. shall be attended to at least twice a week.
(Today, we find several pockets of the E-way are filled with litter, especially plastic tea cups.)
18.104.22.168: Garbage collection
This task includes collection of paper, plastic and other such type of material from the area at the wayside, median, shoulders, at the sides of the road, rest areas, public facilities, interchanges, connector, emergency telephone areas, etc. This activity shall be done manually or mechanically. The garbage so collected shall be put in a yellow or white plastic bag and the bags shall be placed on the beams in order to be removed at the end of the day. The pickup truck that collects the garbage shall transport them to an authorised rubbish dump.
Garbage collection shall be carried out once a fortnight at median, shoulders, on the carriageway and at sides of the road. At the toll plaza or places close to the wayside, amenity centres or petrol station area, where many objects are thrown from cars, garbage collection will be done on a daily basis except on holidays.
(Do send us photographs of any garbage that you might have observed along the E-way to [email protected].)
22.214.171.124: Renewal of paved shoulders
The following renewal treatment to bituminous surfaces, including thermoplastic painting and other road markings, will be provided by the contractor when the roughness index is more than 2,000 or after every four years, whichever occurs earlier.
(Reliable sources in the MSRDC have confirmed to this writer that the shoulders have not been resurfaced even once during the 10 years that IRB has been in charge. The approximate cost of resurfacing is apparently Rs100 crore).
126.96.36.199: Replacement and repairing of road furniture and road signs
- Repair and replacement of road signs and mileage posts
- Repair and replacement of safety reflectors
- Repair and replacement of metal crash barriers
- Repair and replacement of fences
- Repair and replacement of lights
- Repair and replacement of light-posts
- Repainting of road marking and other structures
- Replacement of reflective tapes on metal beam crash barriers and kerbstones
188.8.131.52: Repair and replacement of safety reflectors/delineators
- The above consists of repair or replacement of damaged, faulty, stolen or old safety reflectors. This activity includes the providing of new safety reflectors, delineators, removal of damaged or faulty safety reflectors, and installation of new safety reflectors.
184.108.40.206: Repair and replacement of metal crash barriers and guard rails
- The above consists of repairing or replacing damaged or faulty metal crash barriers due to traffic accidents and vandalism.
220.127.116.11: Repair paint and replacement of fences
The above consists of repairing, painting or replacing damaged, faulty or stolen fences located on both edges of the right of way all along the toll road. The activity includes providing and transporting necessary fences to the job site, painting of existing fencing every three years, by two coats of approved paint, removal of damaged or faulty fences. (As per 18.104.22.168:Fence survey consists of inspecting the existing fence located on both edges of the right of way and reporting of quantum of damage or defect. The patrol inspectors on duty will carry out the inspection twice a day).
22.214.171.124: Repair and replacement of lights
- The above consists of replacing faulty lights, including transporting light to the toll plazas, tunnel inside area, removal of the old lights and installation of new lights. Lights that are replaced shall be of the same or better type and quality than the ones initially installed. Repair and replacement shall be carried out as necessary.
4.3.1: Traffic control and communications
A traffic control room should be established, manned 24x7, which will be the hub of the communication centre, located at the Road Operations and Maintenance office at Kusgaon (near Pune), which will be linked with important persons at all times, by radio or telephone or both.
4.3.3: The control room will also be linked to emergency call telephones installed along the Expressway at regular intervals.
The recent directive by the central government on transparency of PPP
1.2 Public Private Partnerships
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(Vinita Deshmukh is consulting editor of Moneylife, an RTI activist and convener of the Pune Metro Jagruti Abhiyaan. She is the recipient of prestigious awards like the Statesman Award for Rural Reporting which she won twice in 1998 and 2005 and the Chameli Devi Jain award for outstanding media person for her investigation series on Dow Chemicals. She co-authored the book “To The Last Bullet - The Inspiring Story of A Braveheart - Ashok Kamte” with Vinita Kamte and is the author of “The Mighty Fall”.)