Tue September 18, 2012
More Details Emerge in Indian Coal Scandal, With Possible Problems for Kentucky Deal
The Indian media has been all over the recent scandal over the country’s coal allotments—the system where the state’s resources are divvied up among companies. And the various articles are of obvious interest to Kentucky, where a private company recently inked a $7 billion deal to send up to 9 million tons of Appalachian coal to India every year for the next twenty-five years.
I’ve reported on issues with Representative Keith Hall, who helped broker the deal, as well as some major economic questions that the contract raises. And for the past several weeks, there’s been great reporting out of India about the issues the country's coal industry are facing.
India’s equivalent of the FBI is investigating five companies in a scandal being called “Coalgate.” And of those five companies, three are owned by Manoj Jayaswal, who is also the chairman of Abhijeet.
As the Lexington Herald-Leader editorial board put it this morning:
Well, it turns out — and you're not going to believe this — the Indian company is at the heart of a huge corruption scandal.
One of the most telling accounts of corruption was published a week ago in Daily News and Analysis, an English-language paper in Mumbai. The article introduces readers to Jayaswal.
A 10-seater Bombardier jet, a flat in Mumbai that costs Rs75 crore, daughter’s wedding bash in Phuket, real estate in Nagpur running into crores… Manoj Jayaswal, chairman of the controversial Abhijeet Group, sure lives life king-size.
(That jet cost about the equivalent of $14 million, and Indians use the word “crore” to refer to large amounts of money…roughly their equivalent of “millions.”)
The article goes on to talk about how Jayaswal and Abhijeet are leveraging serious money and taking out loans, but has little to show for the expenses.
The Abhijeet Group’s website talks of setting up pithead-based thermal power stations of 5,000MW in Jharkhand, Maharashtra, Bengal and Bihar, and 10 million tonne/annum in integrated steel plants. It’s set to become India’s largest manganese alloy producer by setting up an export-based 180 MVA facility at Visakhapatnam. It is also setting up a 50MW solar plant.
But barring the 271mw Mihan plant, none of its projects is anywhere near on stream so far. While Rs11,000 crore has already been disbursed…
The Hindustan Times had a comment from Kentucky Governor Steve Beshear on the India coal scandal, and its possible bearing on the big Appalachian coal deal. He didn't have much to say.
"I am sure the companies that are selling coal (in Kentucky) will watch the facts develop and then will take decisions accordingly," Steve L Beshear, governor of Kentucky state in the US, told Hindustan Times on the sidelines of a CII function.
Beshear was in India to promote economic development between Kentucky and India.