Although current rules prohibit private players from acquiring mines to extract and sell coal in the open market, they have been using an innovative arrangement with state mining corporations to do the same.
Under this arrangement, the coal ministry awards a mine to a state mining corporation (SMC). The SMC, in turn, floats a joint venture (JV), in which it holds a majority stake as sweat equity, but makes no investment. A private player holds a minority stake, but brings in the entire investment and handles all operations.
If the contract terms are lopsided or if output is not monitored, such an arrangement lends itself to abuse, as the Karnataka Lokayukta exposed while investigating illegal iron-ore mining in the state…
I am an Indian journalist with interests in energy, environment, climate and India’s ongoing slide into right-wing authoritarianism. My book, Despite the State, an examination of pervasive state failure and democratic decay in India, was published by Westland Publications, India, in January 2021. My work has won the Bala Kailasam Memorial Award; the Ramnath Goenka Excellence in Journalism Award; and five Shriram Awards for Excellence in Financial Journalism. Write to me at firstname.lastname@example.org.
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