Washing coal

Needs many factors to be sorted out at the same time,from the Naxal threat to poor rail links

Written by Subhomoy Bhattacharjee | Published:September 11, 2012 3:57 am

Needs many factors to be sorted out at the same time,from the Naxal threat to poor rail links

This year will possibly see higher coal production in India because it has sorted out a crippling problem — the last two years’ shortage of railway wagons to ferry coal from the mines. The supply of rakes to Coal India has improved greatly this year. This increased supply of wagons is,in turn,due to a slump in the production of steel,as iron ore mines are closed. The railways had recently complained to the secretary of steel that the fall in orders for the transportation of steel was having an impact on its top line. So by the end of this year,we are likely to trade shortage of coal for shortage of steel and could possibly shift attention to finding fall guys in the iron ore sector.

There is a vicious interlock of several factors — coal,iron ore,steel,railways and Naxalism. And there will not be any clear way out unless all of these issues are taken on simultaneously. The repeated scams and shortages are a result of plans that do not accept that this puzzle can be solved only by looking at all its pieces together,instead of one at a time.

There is no place better than Ranchi to see how the deadly combination has played out. The Jharkhand capital roughly divides the state into coal-producing areas to the north and iron-ore zones to the south. The two minerals have dominated the short history of the state since it was created 12 years ago.

Corruption at the top is pervasive. The state’s ministers reportedly trade in coal or iron ore,and one of its chief ministers,Madhu Koda,has already spent time in jail in a coal scam of his own making. Its last two chief secretaries have been booted out on corruption charges. Recently,a DGP was caught,allegedly ferrying Rs 5 crore to his account,having purloined it from the state treasury. The CBI has not prosecuted him so far. Its former governor,the late M.O.H. Farook,once told this writer that “all” transfers and appointments in the state carried a price. Since it is the state government,housed in the former headquarters of the public sector unit,Heavy Engineering Corporation,which recommends miners for the screening committee at the Union coal ministry,one can make a good guess on how this has been done. There is a pathetic lack of monitoring. The state has just 40 inspectors to physically monitor its few hundred mines. There are just three state government officers to police over 5,000 sqare kilometres of ore land,from where industries like the Tatas,for instance,get their iron ore. What chance would one of them have,in the middle of the night,accompanied by a local policeman with a lathi,against a fleet of trucks loaded with ore from illegal mines? It is,however,better than guarding consignments leaving the coal mines in Dhanbad,where the mafia is more ruthless,said a former top official of the state government. The absence of rail links from mines makes the situation more dire,especially in the iron ore zone,where crusher plants mix poor-quality ore from illegal mines with high-grade ore and create standard-size pellets. The inspectors sell them mining challans from defunct licenced mines and give the consignments a legal stamp. The entire night’s operation at a plant gets over in an hour. Since the consignment travels by road,the chances of detection are low. However,two years ago,the miners were brazen enough to send contraband ore through the South Eastern Railway to the ports. No heads have rolled in the railways for allowing this.

The systemic problems persist. An audit report from 2008-09,for instance,found that coal sent to washeries from mines in Jharkhand — both run by Coal India subsidiary Eastern Coal Fields — has been terribly undervalued,but that’s where the matter rests.

The possibilities of this situation have not escaped Naxals,keen to finance their war against the state. Just across the tri-junction,where the states of Jharkhand,Orissa and Chhattisgarh meet,is Surguja district. The Naxal cadres in this hilly terrain regularly poach on coal-carrying trucks. Since it is easier for small-time operators to pay and keep peace with them,larger companies prefer to use their services to mine and transport coal. These small-time operators also have far less reputation to risk.

In the controversial coal allocations,for instance,this is the reason why no established names had bid for the mines in Jharkhand. There are established names in Chhattisgarh,which has a far better administrative set-up,but the Naxal threat is more deadly there. I saw an instance of that in Rowghat,where mining equipment was left out in the open by a lessee company because the miners had fled.

So whether it is shoddy administration or the Naxal threat,the costs mount. Jharkhand’s iron ore scam may have been eclipsed by the scale of loot in Karnataka’s Bellary district,but there is no evidence that the administration has improved in the last couple of years. The lull in steel production masks the problem now,but once the economy shows signs of revival and demand grows,the illegal trade might roar again.

If and when the coal mines are reallocated in this region,the same familiar ecosystem will come back into play: a state’s corrupt officialdom,a neighbouring state where Naxals are regrouping and a rail network that has not expanded at all. The only change will be that coal miners would have paid an auction-discovered price,and would hopefully have a larger stake in the business. But without a comprehensive overhaul,one suspects that the next juicy audit report is only to be expected.


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