Auditors – government or private - are not always right in their assessment, nor in their perception of financial statements of organizations. More large global organizations, including governments, have collapsed in the last 25 years due to their auditor’s perceptions, or lack of them, than those in the previous 100 years.

For no rhyme or reason, the government was on a denial mode on the coal block allotment issue from the very beginning creating more public suspicion around its intention. It provided handle to the political opposition in Parliament, leading to multi-tier probe inside and outside Parliament and involvement of judiciary at the apex level forcing the CBI, offices of the solicitor general and attorney general enter the scene with limited brief from political executives and their less competent babus and indulging in open fight among themselves to add to the confusion.

Soon the government lost its grip over the self-indulged confusion. The debate over the issue was becoming noisier with the passage of time, further fuelling the controversy and giving it a dimension of a conspiracy to rob the nation of its natural wealth for the gains of some dozens of private coal block allottees cum speculators in collusion with ministers and bureaucrats. This was totally unfortunate and uncalled for. The event, called ‘Coalgate,’ has succeeded to badly bury the truth – the original reason behind the government’s hurried decision to allocate new coal blocks to willing private enterprises through an inter-ministerial scrutinizing committee to avoid delays from a more transparent but time-consuming auction process. The country’s thermal power, sponge iron and cement plants were increasingly facing severe coal shortages. High import dependence would make the cost of power, steel and cement production very high.

It was a total failure of the government’s internal and external communication machinery to firmly and honestly represent the facts to its audience – the political opposition and the public, in general – regarding what led the government to go for the hasty private coal block allocation decision and how an alternative policy would have compromised the greater national interest and economic needs for the sake of a more elaborate procedural compliance, requiring participation of various departments, especially when the country’s crucial power sector was severely hit by domestic coal shortage despite India sitting pretty over one of the world’s largest coal reserves. The most important imperative about reliable communication is that a communicator must fully believe in the story he wants his audience to believe and appreciate.

The question is: did the UPA government, including the office of the Prime Minister, who held an additional stop-gap charge of the coal ministry during the first phase of the private allocation of coal blocks, truly believe that its allocation policy was absolutely right under the given circumstances before it wanted others to believe in the propriety of its action? The government’s ever-so-shaky response to CAG’s criticism and opposition charges; lack of uniformity in its communication; its department officials, ministers and spokespersons speaking in a babel of tongues before the opposition and media and poor display of its version in Parliament gave an impression that it did not really believe in what it was trying to communicate to the critics and that there was a ‘catch’ somewhere.

However, the facts, put barely, justify the government’s action to quickly bring in willing private enterprises to start mining coal. In fact, privatization of coal was overdue. The current annual coal shortage is close to 150 million tonnes (mt), more than the yearly consumption of 90 per cent countries in the world. India’s thermal power sector’s coal requirement is projected to grow seven per cent annually leading to a demand-supply gap of 230 mt in 2017. Add the coking coal supply gap of 35.5 mt, the import need would touch the 266 mt mark, that year. The share of imports is forecast to increase to 27 per cent by 2017 provided that India strictly meets its domestic output projections. If it fails, there could be massive power shortages across the country. Coal India, the world's largest coal miner by output, already missed its 2012-13 production target of 464.1 mt by 11.9 mt. The state-owned miner accounts for 80 per cent of India’s coal production.

What did the government’s critics expect – sit on the compliance of correct licensing procedures for another five to 10 years? If some of the miners had failed to start production, their lease agreements could be summarily rejected. If some are trying to sub-lease the mine blocks to make easy money, they could be punished. But, should the government allow the nation to suffer ‘black-out’ for fear of a few business rogues taking advantage of its policy and compromise on the country’s energy security?

If anything, the government may be accused of the delay in privatization of the coal sector and not for its late rush. The allegation of a few politically-connected parties getting coal block allotment is simply atrocious unless one could prove financial corruption in such deals. A political connection alone can’t be held against one’s pursuit of business opportunity to establish oneself in the society. If a minister’s son or daughter can become a minister under the democratic system, they can also become business persons.

In a recent interview, former Coal India chairman Partha S Bhattacharyya went on to even suggest that the government should also invite multinational corporations to mine coal in India to increase production, create a more competitive environment and bring in better mining practices to improve quality. Maybe, the government should follow experienced Bhattacharyya’s advice when it reviews the coal policy. The biggest problem facing Indian coal is not its quantitative reserves, but its quality. India has among the world’s largest coal reserves, approximately 267 billion tonnes. Here, the energy derived from coal is about twice that of energy derived from oil. Whereas worldwide, energy derived from coal is about 30 per cent less than energy derived from oil. Bhattacharyya had said there is a vast difference in the quality of Indian coal and that of international coal. Domestic coal is produced in open cast mines through drilling and blasting without any washing which makes it difficult to keep its quality consistent.

It is also a common knowledge that best quality Indian coal exists in deeper seams, the commercial exploitation of which would require large investments in technology and safety equipment. The knowledge, expertise and financial resources of MNCs would come handy especially for underground mining provided they find such coal mining in India, despite its vast local ready market, commercially rewarding. Also for this to happen, the current coal controversy must end fast with the government, political opposition and judiciary taking a more commonsense approach to the resolution of the issue than merely indulging in political brinkmanship to avoid a sure economic disaster. (IPA Service)