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Mahanadi Coal fields Limited has violated strict Central Government norms in order to under-invoice relatively high-quality F-grade coal as lower quality G-grade coal, causing a loss to the exchequer of Rs 45 crore.

Inspection of office documents of BOCM mine by some well informed citizen unveiled a corporate-level scandal at MCL causing losses estimated at over of Rs 43 crore to central Government in excess and Rs 2 crore to Orissa Government. The inspection, which was carried out under the Right to Information Act 2005 on 6^th January '09, unveiled high-level irregularities

During the visit of Director (T) MCL on 09.02.07, directions were given for coal extracted from Quarry no 2 to be offered to consumers as G grade from Belpahar OCP for which a fresh grade declaration was submitted. On the basis of the discussion, coal from quarry no 3 extracted with the shovel and dumpers was stacked nearby.

Close scrutiny of notings revealed that no approvals were received from Coal India Limited to produce G Grade Coal. So the mine was actually producing F grade coal which was sold as G grade from February 2007 to December 2008.  F grade coal is priced at Rs. 2089.54 per tonne, whereas G grade is priced at Rs 425.45. The cost difference was allegedly shared between consumers and corrupt mine officials.

The details of this scam were as follows:

1)      General Manager (SM/QC/COM),MCL made grade declaration in Annual Grade Declaration Booklet of Belpahar OCP mine Rampur Seam (8.47 mtr thick) provisionally as G with effect from 01.03.07 ROM fraction only.

2)     Six months after this declaration, a letter ref.No.D(T)/MCL/SBP/Secy./0708/489 dt.25.08.07 was issued by D(T), MCL intimating Coal Controller of India about declaring Rampur Seam as final grade G superseding the previous order provisional grade under sub clause 2 of clause 4 of Colliery Control order 2000.

3)     Neither Coal India nor Coal controller approved this grade declaration. However,  MCL management declared it as G grade – at first provisionally and later finally. By this process, an entire system for enormous personal gain was created.

4)     Grade declaration made by MCL was improper, invalid  and unauthenticated. In this regard, A Panda, Director, CCO, Kolkata noted in his letter no.CC/Tech/Gr.Dec./MCL/08-09/01 dt.19.03.2008 that the Rampur seam was closed on 10.01.2008 and the inclusion of stock Grade G in the annual grade list for 2008-09 was not agreed on.

5)     Thus, between Feb.07 and Dec.08, the mine Management continuously sold the F grade coal in the name of G grade.

DETAILED MONTHLY ESTIMATES

Month	Opening Stock	Coal Production.	Coal Dispatch/sale	Closing Stock	Reference of document from which figures are taken .
Feb.07	0	78400	0	78400	report of BOCM for the month Feb.'07
March.07	78400	193698	0	272098	report of BOCM for the month Mar.'07
April.07	272098	1700	6913.09	266884.91	report of BOCM for the month Apr.'07
May.07	266884.91	0	0	266884.91	Summary Coal stock liquidation (Gr.G)       This closing stock was also   verified   from Detail of  measurement of    physical stock by CIL team dtd.05/07-   04.2007, (grade G coal =266156.83) ,   was within 5% statutory limit  of   closing stock.
June.07	266884.91	0	200	266684.91	Summary Coal stock liquidation (Gr.G)
July.07	266684.91	0	940	265744.91	Summary Coal stock liquidation (Gr.G) -
Aug.07	265744.91	0	50	265694.91	Summary Coal stock liquidation (Gr.G)
Sept.07	265694.91	0	1103.21	264591.7	Summary Coal stock liquidation (Gr.G) -
Oct.07	264591.7	0	6526.36	258065.34	Summary Coal stock liquidation (Gr.G)
Nov.07	258065.34	0	0	258065.34	Summary Coal stock liquidation (Gr.G)
Dec.07	258065.34	0	211.35	257853.99	Summary Coal stock liquidation (Gr.G)
Jan.08	257853.99	0	4810.61	253043.38	Summary Coal stock liquidation (Gr.G)    Rampur Tap seam was closed on 10.01.08 as per letter ref no CC/TECH/Gr  Decl/  mcl/08-09/1 dt. 19.03.08
Feb.08	253043.38		826.57	252216.81	Summary Coal stock liquidation (Gr.G)
March.08	252216.81		1957.25	250259.56	Summary Coal stock liquidation (Gr.G) -
April.08	250259.56		300	249959.56	Summary Coal stock liquidation (Gr.G)      This closing stock was also verified       from Detail of   measurement of    physical stock by CIL team dt.07/09-    04.2007, (grade G coal == 248577.15 ,     was within 5% statutory limit  of     closing   stock m
May.08	249959.56		0	249959.56	Summary Coal stock liquidation (Gr.G)
June.08	249959.56		0	249959.56	Summary Coal stock liquidation (Gr.G) -
July.08	249959.56		0	249959.56	Summary Coal stock liquidation (Gr.G)
Aug.08	249959.56		189.48	249770.08	Summary Coal stock liquidation (Gr.G) -
Sept.08	249770.08		41053.5	208716.58	Summary Coal stock liquidation (Gr.G)
Oct.08	208716.58		39982.96	168733.62	Summary Coal stock liquidation (Gr.G) -
Nov.08	168733.62		73083.43	95650.19	Road Sale statement of BOCM mine for the month Nov-2008
Dec.08	95650.19		49959.29	45690.9	Road Sale statement of BOCM mine for the month Of December-2008
	TOTAL =	273798.00	228107.10	45690.9	Note :-remaining stock  referred in closing stock.

The above table  shows that coal production of F grade was 2,73,798 t, out of which 2,28,107.10 was sold up to December 2008, and 45690.9 t remained as closing stock. However, it was observed that this stock was also depleted. In short, the entire lot of 2,73,798 t of F grade coal was sold in the name of G grade.

Who were the buyers of this under-priced coal?

Documents collected during the citizens' RTI inspection revealed that coal of the declared grade of E/F was auctioned as G grade and was lifted by M/s Aryan Ispat & Power (Pvt) Ltd, (Bomlai, P.O:Lapanga Dist: Sambalpur) in blatant deviation from all past practices. In a spot E-auction sale against offer dated 27.9.08 Road Delivery Order for 78973 tonnes was issued vide D.O No:0069363 dated 16.10.08 for sale of coal as Gr- G ROM (Stock). Also, against offer dated 29.09.08 in spot E-auction Road DO No:0069396 dated 16.10.08 for 2000 tonnes was issued for coal as Gr-F STEAM (Stock) in favor of M/s Vinayak Infrastructure (Bazarpada ,Belpahar Dist: Jharsuguda).

These DOs show that basic price of G Grade is only Rs 320/ton that of  F Grade is Rs 1816/tonne. Consequently the ad.vel royalty@5% of basic price is Rs 16/tonne and R/s 90.8 /tonne respectively. The total payment including service charges for 2000 tonnes of F Grade steam is Rs 4179085.68 only as against total payment of Rs 33519803.52 only for 78973 tonnes of G Grade ROM.

RDO no and date	Grad of coal	Qty.of coal M.Ton	Total Amount for Payment including Royalty	Cost  of Coal/ton  =(B/A)	Remarks
69363      dt 16.10.08	G	78973	3,35,19,803.52	425.45	Coal lifted by Aryan Ispat and Power in Oct`08 (21764.97t) and in Nov`08(57208.00)
69396      dt 16.10.08	F	2000	41,79,085.68	2089.54	Coal lifted by M/sVinayak Infrastructure, Bazar pada, Belpahar  Dist: Jharsuguda

Estimating Loss to the Exchequer

As per DO No.69363, 78973 tonnes of G grade coal was sold in Rs.33519803.52 including S.C. and Royalty. Thus the cost of tonne comes to Rs.424.45.

Similarly, as per DO No. 69396, 2000 tonnes F Grade coal was sold on Rs.4179085.68  including S.C. and Royalty. Thus the cost of one ton F coal comes to  Rs 2089.54 p.

Hence the difference of rate between "F" and "G" grade coal is Rs. 1665.09 p. which comes to Rs, 45,58,98,311.80. (Rupees forty five  crore fifty eight lakhs, ninety eight thousand three hundred seventy one and paise eight only ) to the central government including royalty payment to Orissa State

.

If we consider the difference of Royalty of F & G Grade (90.8 -16.0 = 74.80), then the loss to State Govt. directly = Rs.74.80 x 273798.00 = Rs 20480090.40 (Rupees two  crore forty eight  lakhs ninety and paise  forty ) due to conversion of grade from F to G.

Coal grade declared for the mine is E and F .Since coal is supposed to have been released from stock collection of E Grade steam in place of G Grade ROM can not be ruled out and in such a case the loss to Government is far greater than estimated. Road Sale of coal at Belpahar OCP as Grade G ROM is a crime which must not be allowed to go unpunished.

It is also pertinent that that business associates of the purchasing firm are the Ex-services (ESM) coal mining/ transport company operating at Belpahar OCP of MCL and also operating a coal beneficiation plant (GCMPL) close to the OCP as per the DO.

Useful phone numbers for Journalists

Ramesh Tripathy (9437346385)

Mr Gupta, General Manager, Lakhanpur Area ,

Mobile no 9437961385  Landline no 06645-233202

S R Upadhaya, Chairman &  Managing Director, Mahanadi Coalfields limited Orissa   Landline no 06645-2542855/2405168