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Modi govt allowed Adani coal offers it knew have been ‘inappropriate’ | Enterprise and Financial system

New Delhi, India – The Indian authorities granted a unprecedented favour to controversial tycoon Gautam Adani, boosting his coal enterprise, paperwork reveal.

After Prime Minister Narendra Modi’s workplace had ascertained {that a} explicit regulation handing over coal blocks to the non-public sector was ‘inappropriate’ and lacked transparency, his authorities made an exception. It allowed Adani Enterprises Restricted to mine from a block holding greater than 450 million tonnes of coal in one among India’s densest forest patches.

The federal government didn’t clarify why the Adani Group, owned by billionaire Gautam Adani, was given an exception, paperwork accessed by The Reporters’ Collective (TRC), a non-profit media organisation primarily based in India, and Al Jazeera present.

Till a current inventory market rout on allegations of accounting fraud by a US-based quick vendor, Adani was the third-richest particular person on the planet.

His group was given the exception below a regulation launched by the Modi authorities following a 2014 Supreme Courtroom ruling that cancelled the allocations of 204 coal blocks. Lots of the blocks had been illegally allotted to firms owned by state governments, the courtroom discovered. These firms, in flip, had been handing over the profitable enterprise of mining to personal firms at costs that have been stored below wraps in secret contracts. The Adani Group received one such contract in July 2008.

The courtroom had discovered all this had gone on with out legislative sanction and, in its ruling, cancelled all of the coal blocks and the mining contracts that had been handed out, forcing the businesses to forfeit them.

However the Modi authorities’s selections enabled the Adani Group, whose enterprise fortune has risen in parallel with Modi’s political heft, to proceed to mine coal, unfettered by the courtroom ruling in addition to the federal government’s personal coverage selections that put many different non-public gamers at a drawback. So far, the corporate has mined greater than 80 million tonnes of coal from the block.

Coal rip-off

In 2014, a brand new authorities led by Modi’s Bharatiya Janata Get together (BJP) rode to energy on an anticorruption wave. The earlier Congress-led United Progressive Alliance (UPA) authorities had been caught in a swirl of reports studies, auditor findings and litigation pointing to large-scale corruption and crony capitalism in two explicit sectors — the allocation of airwave spectrum to telecom firms and distribution of coal blocks to personal miners. The latter was dubbed “Coalgate”.

As an alternative of auctioning them to earn the very best doable income, the UPA authorities allotted coal mines to industries by an opaque and discretionary technique, charging a minimal royalty. The Comptroller and Auditor Normal of India (CAG), the federal government account’s auditor, concluded that this modus operandi had precipitated a nominal lack of $22bn to the exchequer.

In his political campaigns within the lead-up to the 2014 nationwide elections, Modi berated the UPA authorities, “Coal rip-off has darkened the face of complete nation,” he tweeted on September 13, 2012. “AICC is now an abbreviation for All India Coal Congress,” he added, twisting the abbreviation for All India Congress Committee, the formal identify of the incumbent Congress social gathering’s central decision-making physique. After profitable the elections, his authorities got down to “transparently” re-auction the coal mines.


Our investigation, nonetheless, reveals that even the brand new administration allowed non-public firms to proceed to bypass the aggressive course of to nook massive coal reserves. Half one of this sequence confirmed how the federal government allowed enterprise conglomerate RP-Sanjiv Goenka (RPSG) group to make use of shell firms to undercut competitors in coal auctions and regain entry to a coal mine. Half two reveals how the federal government helped the Gautam Adani-owned group to proceed its coal-scam-era offers by one other route.

Bypass route

In the course of the UPA administration, coal blocks have been allotted not simply to personal sector companies but in addition to central and state government-owned firms. They in flip gave the mining rights to personal firms below secret contracts at undisclosed charges. Within the mining business jargon, these contracts are known as Mine Developer and Operator (MDO) contracts.

For the Adani Group, the MDO route, with its increased revenue margins in contrast with the funding and working price of working the enterprise, was a profitable entry level into the coal enterprise despite the fact that, technically, business coal mining was nonetheless prohibited on the time. Over time, the group has emerged as India’s largest coal MDO — at the moment, it has 9 MDO contracts for blocks holding greater than 2,800 million tonnes of coal.

By 2014, the Adani Group had cornered 5 such contracts.

Two contracts have been signed straight by BJP-ruled state-owned companies. One was signed by a Congress-ruled state authorities. Two others have been joint ventures between completely different state-owned firms. In each these latter circumstances, one of many joint-venture companions was a agency owned by a BJP-ruled state authorities.

Enter the Supreme Courtroom

Then the Supreme Courtroom stepped in to smash the social gathering.

In response to a public curiosity litigation, India’s highest courtroom held that almost all coal block allocations had been arbitrary and unlawful.

It concluded that the allocation technique had arrange an unlawful backdoor route for the mines to enter “the fingers of personal firms for business use”. It struck down 204 coal-mine leases that have been on the centre of the scandal.

It concluded that the extant legislation permitted allocating coal blocks to central authorities firms however to not state government-owned firms. The 204 cancelled coal-block leases included 101 leases made to state government-owned firms. A lot of them had already outsourced the mining to personal firms by MDO contracts.

With the unique allocations to the state governments’ firms cancelled by the courtroom, the next MDO contracts by these firms with non-public gamers have been mechanically annulled.

Loopholes within the superb print

Indian Prime Minister Narendra Modi.
Indian Prime Minister Narendra Modi swooped into energy in 2014 on an anti-corruption wave and promised to usher in a clear and clear system to allocate pure sources [File: Adnan Abidi/Reuters]

The Modi authorities now had a clear slate to work with. The courtroom’s order meant the federal government may now public sale all 204 coal blocks with out worrying about earlier beneficiaries who had received the blocks for a tune. The federal government promised to usher in a clear, clear regime to take advantage of coal mines. “We’re specializing in bringing transparency in allocation of pure sources together with coal blocks,” then Dwelling Minister Rajnath Singh stated at a public occasion in January 2015. “We have now been in a position to rebuild confidence and belief that’s extraordinarily necessary to revive investments and drive increased development,” he stated.

The federal authorities introduced in a brand new legislation and amended present mining legal guidelines, claiming they’d guarantee coal blocks are auctioned to the very best bidder and never allotted at no cost.

This was solely half the reality. The federal government had left open a window of discretion within the rules. It may select which of them to public sale and which of them to allocate to states. What the Supreme Courtroom had termed unlawful, Modi’s authorities gave legislative backing and empowered itself to make discretionary allocations but once more to state government-owned firms.

This was not all. For the primary time, it gave express legislative backing to the controversial MDO contracts as effectively. A mannequin contract was additionally ready which bared the federal government’s intentions: Components of or your complete contract might be avoided residents’ scrutiny, the mannequin contract really helpful. But once more, nobody would come to know the value at which the state authorities gave a mine to a personal firm.

The federal government’s subsequent step was much more exceptional. And it got here to assist the Adani Group.

The federal government inserted a provision within the legislation permitting state governments, which have been freshly allotted mines, to proceed the MDO contracts that the earlier proprietor of their mines had earlier than the courtroom cancelled them. The states wouldn’t should conduct a brand new spherical of auctions to seek out which non-public participant is prepared to cost the least to mine the coal. The MDO contracts that had been annulled as a result of Supreme Courtroom orders may now be reinstated with the identical firm even when the coal blocks modified fingers between state government-owned companies.

Reinstating Adani Group

This distinctive provision got here in helpful for a BJP-ruled state authorities to reinstate Adani Group firms as MDOs for 2 mines. Actually, one among them was the first-ever coal MDO contract signed within the nation.



In 2007, Parsa East & Kente Basan, a coal mine with greater than 450 million tonnes of coal, was allotted to Rajasthan Rajya Vidyut Utpadan Nigam Restricted (RRVUNL), a Rajasthan state-owned energy firm.

Greater than a yr earlier than it was allotted the block, the Rajasthan public sector firm picked Adani Group because the accomplice for its three way partnership — Parsa Kente Collieries Restricted. Adani Group owned 74 % of the shares of the three way partnership whereas the state-owned agency held 26 %.

In July 2008, this three way partnership signed an MDO contract for the Parsa East & Kente Basan coal mine in Chhattisgarh’s Hasdeo Arand forests. When the MDO deal was signed, the BJP was in energy in each Rajasthan, with Vasundhara Raje as Chief Minister, and in Chhattisgarh, with a Raman Singh-led authorities. By 2013, coal manufacturing had begun on the mine. A yr later, in 2014, the Supreme Courtroom quashed the Rajasthan state-owned agency’s mining rights for the block together with 203 different blocks nationwide.

On March 26, 2015, the block was reallocated to RRVUNL to gas two of its thermal energy stations. Below the clause within the new coal legislation that allowed previous MDO contracts to be reinstated, the Rajasthan state-owned agency continued its coal-scam-era settlement with its Adani Group-led three way partnership. Adani Enterprises, in its annual report for the monetary yr 2015, famous, “Pursuant to re-allotment, RRVUNL has determined to proceed present contract with PKCL [the joint venture] for growth and operation of the coal block.”

The 2020 scrutiny

Authorities assume tank NITI Aayog, on an undisclosed date, shared a secret report on mines, minerals and the coal sector with the cupboard secretary — the nation’s senior-most bureaucrat who studies to the prime minister straight.

The contents of the report have by no means been made public, and the federal government has blocked entry to it even below the Proper to Info Act. However TRC received entry to different correspondence round this report made by completely different arms of the federal government.

The report triggered an intense evaluate of your complete MDO contracting enterprise by the cupboard secretary and the Prime Minister’s Workplace (PMO).

Paperwork accessed by TRC for Al Jazeera utilizing the Proper To Info functions present that in March 2020, the PMO and different authorities departments have been discussing how flawed the MDO mannequin is.

“The observe of MDO appointment” lacks “consistency and transparency” for which it should “proceed to be questioned in public area,” then deputy secretary and present non-public secretary on the PMO Hardik Shah wrote to the CEO of NITI Aayog on March 4, 2020.

As non-public secretary, Shah, a Gujarat cadre bureaucrat, is among the many 5 highest-ranking bureaucrats within the prime minister’s coterie of officers.

Shah quoted the cupboard secretary within the letter that “appointment of MDOs earlier than the allotment of mineral blocks seems inappropriate and this is probably not allowed in future.”

Merely put, the PMO was referring to the observe of continuous offers the Supreme Courtroom had discovered unlawful. It wished the observe discontinued.

Adani PMO letter
In its March 2020 letter, the Prime Minister’s Workplace flagged points in appointments of MDOs and requested NITI Aayog to border tips [Courtesy: The Reporters’ Collective]

The NITI Aayog and the ministries of coal, finance, mines and metal agreed with the PMO and determined that no such contracts could be allowed sooner or later.

Officers from these ministries met twice in 2020 — on August 25 and October 7 — to give you suggestions the PMO had requested for.

On “appointments of MDO earlier than allotment of block”, the mandarins stated the observe “takes cue” from the availability of the brand new coal legislation which allowed reinstating previous MDO contracts. The officers identified that on the time there was only one such case during which the coal-scam-era MDO contract had continued — the Adani Group settlement with Rajasthan’s energy technology firm to mine the Parsa East & Kente Basan coal block.


A government document shows that it allowed a mine that was allotted to the Adani Group to continue with it.
Excerpts from the minutes of the inter-ministerial conferences held in August and October 2020 [Courtesy: The Reporters’ Collective]


Adani image 4: Excerpts from the minutes of the inter-ministerial meetings held in August and October 2020
Excerpts from the minutes of the inter-ministerial conferences held in August and October 2020 [Courtesy: The Reporters’ Collective]

They, nonetheless, really helpful that the clause within the Modi authorities’s 2015 coal legislation, which helped the Adani Group, shouldn’t be modified. As an alternative, they determined {that a} clause to bar the revival of previous MDO contracts must be added in future agreements that state government-owned companies would signal when they’re reallotted the mines. This might be certain that the Adani Group’s coal-scam-era MDO offers remained untouched.

They gave no cause for not recommending an modification to the clause that allowed reinstating previous MDO contracts.

In the meantime, to deal with the PMO’s concern over a ‘lack of transparency’, the officers got here up with a moderately beauty resolution. The officers really helpful that the phrase “clear” must be inserted earlier than the sentence “aggressive bidding course of” within the Coal Block Allocation Guidelines of 2017, which state that “choice of new MDOs can be by aggressive bidding course of”.

The Adani Group was given distinctive leeway.

In response to an in depth questionnaire despatched by TRC and Al Jazeera, an Adani Group spokesperson stated that every one contracts have been awarded by a clear and aggressive bidding course of in accordance with all relevant legal guidelines and that any considerations concerning the course of must be directed to the related authorities. The complete response of the Adani Group will be accessed right here. The coal ministry, the PMO and NITI Aayog didn’t reply to our queries.

One other exception

TRC filed a Proper to Info request with the Ministry of Coal asking which firms had received the blocks below this particular provision. The ministry didn’t record one other block the Rajasthan state authorities had handed over to the Adani Group — Parsa. It didn’t have to as a result of the Vasundhara Raje-led BJP authorities in Rajasthan had used one more technical excuse to present the block to the group.

The Parsa block, adjoining to Parsa East & Kente Basan — and with greater than 200 million tonnes of mineable coal — was initially allotted on August 2, 2006, to Chhattisgarh State Energy Technology Firm Restricted. This agency is owned by the federal government of Chhattisgarh, which on the time was ruled by the BJP. In 2010, this state-owned agency shaped a three way partnership with the Adani Group. The three way partnership would function an MDO for the block.

In 2014, the Supreme Courtroom quashed this allocation of the Parsa block together with the 203 different mines and a yr later, the Parsa block was up for grabs. Adani Enterprises really helpful to the Rajasthan energy provide agency that it apply for the allocation of the block.

It was “on the idea of this suggestion” and Rajasthan’s “coal requirement” for its “varied thermal energy vegetation” that the state government-owned firm utilized for allocation of the Parsa block, in accordance with particulars within the MDO contract.

A government document shows the allocation of the Parsa coal mine.
Adani Enterprises really helpful to the Rajasthan energy provide agency that it apply for the allocation of the coal block as per the MDO contract [Courtesy: The Reporters’ Collective]

By March 2015, the Rajasthan government-owned agency had bagged the block. This time round too, the BJP was in energy in each Rajasthan and Chhattisgarh.

With out a new public sale — opposite to what the PMO itself had stated — it appointed its Adani Group-led three way partnership because the MDO for the block. With this, the group continued as MDO for the coal block even because the block itself modified fingers from one state-run agency to a different.


Till March 2021, the Adani Group remained the only beneficiary of the distinctive clause. The highest bureaucrats within the Modi authorities allowed it regardless of admitting it was “inappropriate”.

Although the bureaucrats had determined in October 2020 that no different previous MDO contracts could be revived, aside from the one already allowed for the Adani Group, the choice was undone 5 months later by one other BJP-ruled state. In March 2021, the Karnataka authorities revived one other coal-scam-period MDO contract for a mine reallocated to its energy technology firm Karnataka Energy Company in favour of the Kolkata-based non-public agency EMTA.

On this case although, the federal authorities had washed its fingers of any accountability and allowed the state to take the decision. This was regardless of the continued inner evaluate of MDO offers within the nation. “Ministry of Coal has no position to play within the novation of prior contracts … It’s the only resolution to be taken by the state authorities/KPCL,” the ministry had written to the Karnataka authorities in June 2020, eight months earlier than the choice to revive the EMTA MDO. EMTA didn’t reply to an in depth questionnaire despatched by TRC and Al Jazeera.

Shreegireesh Jalihal and Kumar Sambhav are members of The Reporters’ Collective.

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