Editorial- April 2018

In a big reform in the coal sector, the cabinet on Feb 20, 2018 allowed private players to commercially mine coal and sell it in the market without any restrictions on price and end-use. They can sell within India and/or export it. With this, the government aims to cut imports, create local jobs, bring efficiency, reduce cost, and boost economy.

The move paves the way for the entry of giants such as BHP, Rio Tinto, Glencore, and Anglo American and ending the monopoly of public sector Coal India Ltd. CIL has been the sole commercial miner in India for 41 years now.

The government aims to conclude the auction in 2018-19, so that production can start in two to three years. The revenue generated from the mining would go to the mine bearing states, and centre will not get any share from coal mining.

The coal consumers, mining firms and industry analysts have welcomed the decision, but unions have opposed the move citing fear of handing over the mining of the natural resource to foreign firms. This is our cover story.

In the lead story we have covered tendering by ONGC under Shashi Shanker, the then director (T&FS). The Independent External Monitor (IEM) has observed that the integrity of tenders was “jeopardized”.

On Feb 20, 2018, the Bombay High Court upheld IEM’s decision of cancelling a Rs 1,000 crore tender that was recommended by ONGC for award to Core Offshore Services Pvt Ltd. This tender was for charter hire of barges and tugs for its operation near its Mumbai offshore that ONGC invited in Jan 2015. IEM had observed that the sanctity of the tender process had compromised.

There are number of such incidences in which IEM has played key role reversing the decision of ONGC. In another tender floated for the procurement of Blowout Preventers (BOP), ONGC’s MM department tried to avoid placing orders on the L1 bidder Worldwide Oilfield Machine (WOM) by asking irrelevant questions related to experience after the opening of financial bids. But on the intervention of IEM, the situation was averted and the orders were placed on WOM. In this case, initially the oil ministry had suspended Mr Shanker in Feb 2015, but later reinstated him, condoned his suspension period, and elevated him to the post of CMD.