Scam-hit UPA government has stumbled on another potential scandal. The steel ministry has set up a panel to probe into alleged malpractices in coking coal purchases by steel PSUs such as SAIL and RINL and the mining firm NMDC.
?We have noticed a few aberrations in coking coal purchase (by these PSUs). When rates of coking coal are high (in the international market), the purchases increase and when the prices go down, purchases also go down. That’s why we have constituted this committee to find out why this happens,? steel minister Beni Prasad Verma told a news agency.
Coking coal is an important raw material used by steel makers. As the raw material is not adequately available in the domestic market (especially the prime grade, which has to be mixed for blast furnace operation), it is largely imported. India imported 36 million tonne of coking coal in 2010 and spent billions of dollars for that. The imports this year are projected to be of the same order and given the rapid expansion of the steel-making capacity in the country, imports are expected to accelerate in the coming years.This accounts for some 13% of the total sea borne trade volume projection of the commodity in the world market, which is 270 million tonne and worth $80 billion in 2011.
The minister said that the committee, headed by the additional secretary in his ministry, would scrutinise the coking coal procurements by the PSUs. It would submit its report by December, he said.
The minister has recently taken SAIL to task for its failure to complete expansion projects on time, resulting in cost escalation. Interestingly, the probe panel would also include senior officials of the PSUs concerned.
Coking prices have firmed up last year with global spot prices rising to $350 per tonne from a level of $200 in early part of 2010. Even long term contract prices rose around 50% last year to over $ 240 per tonne. Prices have now eased to $200-$201 per tonne under contract and around $270 per tonne in the spot market.
?The PSU import deals are suspect as the country imported almost 36 million tonne of coking coal in 2010, at a time when coal prices had peaked. During the year, there was no significant addition in domestic steel making capacity,? said a steel ministry official.