Coal-Gate: From India To America, Taxpayers Are Getting Scammed By Fake ‘Auctions’

A $33 billion “Coal-Gate” scandal is rocking the Indian government. This “mother of all scams” created a windfall for private developers who secured public resources at rock bottom prices.

As a beleaguered Prime Minister Singh takes to defending this egregious allocation of public resources, it’s important to recognize that Coal-Gate isn’t just happening in India. It’s happening everywhere, including the U.S., and it must be stopped.

Advertisement

If there is one thing average Indian citizens hate, it is corruption.The report breaking the scandal details how the government gave away public assets (coal deposits for less than $3/ton and lots and lots of excess land) to private companies through a “no-bid” process. They basically gave away public resources to private companies, claiming it was for the “public interest.” The deposits also happen to lie under India’s remaining forests that are home to endangered species (including the nearly extinct tiger) and tribal communities. These forests must be razed to get at the coal beneath them — an unacceptable attack on species protection, inclusive growth, social justice and the climate.

But you know where else this epic scandal occurs? On Western public lands in the Powder River Basin in the United States. A few months back, environmental groups sent a letter to the U.S. Bureau of Land Management requesting that they cease “auctioning” public assets to a single bidder. The scale of this coal scam is “only” $28.9 billion — a few billion dollars less corrupt than India’s. But who’s counting?

The truth, however, is that the situation in the U.S. is worse. We consider an “auction” to consist of one participant — which then ends up getting public resources at a firesale price of $1 per ton. (They then turn around and sell that coal to our Indian friends at prices as high as $100/ton). Indians at least sold coal for $3/ton and were honest enough to not call it a “bidding process.”

Sometimes the participating corporate players received U.S. financial support for tainted projects. For instance, the 4,000 megawatt Reliance-developed Sasan coal plant was funded by the U.S. Export Import Bank and received $5 billion in profit as a part of coal-gate — something the U.S. Export Import Bank due diligence unsurprisingly failed to show. But for the U.S. Export Import Bank that’s neither here nor there — it’s actually everywhere.

Advertisement

U.S. involvement aside, Tata, Reliance, and Adani are in the midst of an even more brazen scam. Despite receiving land and coal for next to nothing as hundreds of millions suffered in the great Indian blackout, they were not busy building projects and delivering power — they were busy publicly decrying “environmental hurdles” and bureaucratic delay as the cause of the coal crisis.

While they were attempting to gut environmental standards, these same companies were busy seeking a bailout for “flagship” projects like Tata Mundra and Krishnapatnam.

But why would “dirt cheap coal” need a bailout? Because cheap coal is dead. This is why Tata, Reliance, and Adani desperately need a tariff revision so they can raise rates on average citizens and keep their profits up.

So as the coal-gate scam explodes, these players are asking for a bailout. The political timing would be laughable if regulators were prepared to stand up for the average citizen, not industry. Instead, just like Prime Minister Singh, they are falling in line to defend these “barons of industry” by securing their requested bailout.

Our Indian friends and colleagues are rightly angry. Really angry. Giving away polluting coal must stop. Better yet, we must keep coal in the ground entirely.

Advertisement

Justin Guay is with the Sierra Club, Ashish Fernandes is with Greenpeace India, and Chaitanya Kumar is with 350.org. This piece was originally published at the Sierra Club’s Compass blog and was reprinted with permission.On the 10th of November, thousands of people will come together for a day of action across India protest her dependence on coal and highlight the decentralized alternate energy solutions already available.