The Supreme Court declared that all coal mining rights between 1992 and 2008 were assigned illegally by the government in a process that lacked transparency in the absence of a competitive bidding system or auction
The Supreme Court on Monday has said all coal block allocations since 1993 till 2010 before pre-auction era have been done in an illegal manner. However, the apex court said, further hearing is required to determine whether there is a need for cancelling 218 coal block allocations.
A Bench headed by Chief Justice RM Lodha said, the coal block allocation done by screening committee was not fair and transparent. "All allocations were done in illegal manner and suffers from vice of arbitrariness. No objective criteria was followed and guidelines were breached in coal block allocations," the Bench said.
The Supreme Court examined alleged irregularities in the allocation of about 194 coal blocks in Jharkhand, Chattisgarh, Maharashtra, West Bengal, Odisha and Madhya Pradesh to private companies and parties during 2004 to March 2011.
The Court said it would appoint a high-level committee of retired judges to identify those who will be affected by its order. The Bench also said it will address the issue of the legal consequences of its ruling on 1 September 2014, when it creates a committee to identify those whose allocations will be cancelled.
Earlier, the Comptroller and Auditor General (CAG) report submitted in the Parliament in August 2012, has stated that there had been an estimated loss of Rs1.86 lakh crore due to coal block allocation without auction from 2005 to 2009.
Neither the RBI nor the SEBI was interested in regulating deposits collected by jewellers. Now, new Rules under the Companies Act 2013, are forcing corporate jewellers to stop such schemes
Reliance Retail Ltd said it has decided to discontinue its 'Golden Steps Jewellery Purchase Scheme' and 'Diamond Dream Jewellery Purchase Scheme' with immediate effect. The company will not accept fresh or further subscription or instalments for these schemes, Reliance Retail said in an advertisement.
"Subscribers to the jewellery purchase schemes are requested to visit the Reliance Jewels store where they have opened their account, along with their ID proof, address proof and Scheme related documents in original, for redemption and closure of accounts with jewellery purchases before 31 October 2014," the advertisement reads.
Under Rule 3(6) of Companies (Acceptance of Deposits) Rules, 2014, no company can accept deposit, which carries a rate of interest more than what has been prescribed by Reserve Bank of India (RBI) for deposit accepting non-banking financial companies (NBFCs).
In other words, jewellers' gold savings schemes needs to be on par with public-deposit schemes. The Rules limit the return companies can offer to deposit holders to 12% and caps the total amount of deposits to 25% of their net-worth.
The way to comply with new Rules is to return the deposits to the public before 1 April 2015. If not, they will be penalised in accordance with the provisions of the Act. It means small or big jewellers will have to comply. But, will it cause trouble for small jewellers, especially if the size of deposits is huge when compared to its own net-worth? Have the jewellers kept the deposited money in safe instruments like bank fixed-deposits (FD) or in risky avenues? Moreover, have they really kept it aside or have they been using it for business operations, which can make the refunds to everyone virtually impossible?
Moneylife had written in mid February 2014 about jeweller gold savings scheme coming under the Securities and Exchange Board of India (SEBI) scanner. But SEBI is yet to wake up to thousands of crores invested by consumers in gold savings schemes of jewellers which can easily qualify as collective investment schemes. SEBI and RBI had replied to an Right to Information (RTI) application stating that such schemes are not regulated by them at all.
Moneylife had done a survey last year for our cover story on gold. Almost half of the respondents were aware of jewellery gold savings schemes offered by jewellers such as Tanishq, but surprisingly only 15%would invest in such schemes and it was more for ease of payment rather than for better returns or tax savings.
The new Rules may not apply to 'Gold Deposit Schemes' (GDS). A gold savings scheme is the opposite of GDS, which is offered by banks like SBI and registered NBFC. GDS from jewellers is unregulated. Under GDS, you give your gold to get a higher quantity of gold at the end of one year, or get monthly payment as well as return of your gold at end of the term. The interest rate for SBI GDS three-year deposit is 0.75%, for four and five years it is 1%. It’s not great, but it is calculated in gold terms. Jewellers offer a high rate of interest of 7.5%, but there is absolutely no safety.
It would be far more realistic and practical, if contractors like Cairn have an automatic authorisation to increase output by upto 25% more than the "permitted" or "authorised" clearances
It is gratifying to note that the Ministry of Environment and Forests has given its approval to Cairn India to raise its oil output in the Barmer fields in Rajasthan, from its current (about) 200,000 barrels a day to 300,000 barrels. Now Cairn plans to spend some $3 billion on the oil recovery programme and also to double the natural gas output in the State. At the moment, Barmer fields reserves are said to hold 3 trillion cubic feet (tcf) of oil.
The production sharing contract (PSC) for Cairn expires in May 2020 and is renewable by ten years.
The gestation period required for increasing the oil production by 100,000 barrels a day to reach 300,000 barrels would take about two years to achieve. The "in place" reserve of oil identified by the company is about 5.8 billion barrels and by March 2015, this may increase by 1.2 billion barrels to reach 7 billion barrels.
It is reported that Cairn is already working on the new gas plant at Raageshwari Gas Terminal to process 85 mscmd of gas. It may be noted that the Rajasthan Block output is 183,164 barrels of oil equivalent (oil and some gas). It may be recalled that the oil production started in 2009 but could be only commercialised in March 2013.
In so far as Cairn is concerned, between 2011-12 and 2014-15 (so far), there have been 40 discoveries, consisting of 18 oil and 22 gas, on land and offshore. But declaration of commerciality has been reviewed for four discoveries only (by block management).
Although the overall demand for gas has been rising in the country, actual gas production has been 129 million standard cubic metres per day in 2014-15. This was stated by Minister Dharmendra Pradhan in the Parliament recently. He also mentioned under the production sharing contract regime, discoveries made are required to be developed in accordance within the specified time frame. His ministry would be following up this matter regularly with all concerned.
Dharmendra Pradhan reiterated that the Government has "the right to conduct oil and gas block audit" under Section 1.9 of the Accounting Procedure of the Production sharing contract and to audit all fields, both pre-NELP and NELP blocks.
What is important, however, is that an "audit" happens after an "event" is actually over! What we need to do is to ensure that the government has a watch-dog committee of technically qualified personnel to make surprise inspections of the fields from time to time. Also, there is a need to oversee that the mutually agreed regime is in place and that the work is progressing accordingly.
Digressing for a moment, if the past is any criterion, government officials charged, at least in the case of Reliance Industries Ltd, that they (contractor) did not drill sufficient wells to tap gas resources in KG-D6. For example, if "x" number of wells are planned to be drilled to explore gas/oil resources, this watch-dog committee must be on their toes to ensure that this job is actually done. A day lost in not doing the assigned job is lost for ever!
Now, as we can see in the case of Cairn, it will take anything upto two years more before they could increase the oil production to 300,000 barrels a day to have all the needed equipment in place and do all the spade work that is needed to get on with the job. It would be far more realistic and practical, if contractors like Cairn have an automatic authorisation to increase the output upto 25% more than the "permitted" or "authorised" clearances. We do not know how long it took Cairn to get the MOEF clearance to move from 200,000 to 300,000 barrels a day. But we do know now that it would take something like two years before this can be reached! Why not have automatic authorisations for increasing the production capacity of "x" percentage? Why should the process of "obtaining" clearance be enforced?
In the meantime, the Fertiliser Ministry is setting up a task force to draft a policy - in the next two-three weeks - to work out a new Policy. It seems the new fertiliser policy will be focusing on bio-fertilizers, organic products and micro-nutrients. It may be remembered that the Fertiliser Ministry has been demanding an increase in the domestic gas allocation to urea plants so as to replace the costly imported LNG, which is currently being used as feed stock by some. Such a move may save the government about Rs15,000 crore in subsidy. We need to increase the gas production from contractors like Cairn, Reliance, ONGC and GSPC.
The point that we make on this issue is all the gas and oil producers are already operating in their assigned territories after getting the needed MOEF clearances. Therefore, in order to increase their production, if possible, they should not be made to go through the regime of getting additional "clearances" for all those departments once again, as this means loss of time.
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)