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September 04, 2012

From India to the US: 'Coal-Gate' is Everywhere

India Coal PlantsCo-authored by Justin Guay of the Sierra Club, Ashish Fernandes of Greenpeace India, and Chaitanya Kumar of 350.org.

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 USA, and it must be stopped. 

It’s important to understand just how big of a deal this scam is in India. If there is one thing average Indian citizens hate its corruption. That’s because scandal after scandal (from the Indo-US nuclear deal to 2-G) has beset the Indian gov’t. It’s what helped propel Anna Hazare and his movement to global fame and rallied an apathetic middle class to action. Then came coal-gate.

The report which broke the scandal essentially 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 under the guise of 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? The Western public lands in the Powder River Basin in the United States. Just a few months back environmental groups sent a letter to the US 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. So the US coal-gate is only a few billion dollars less corrupt than India’s. But who’s counting?

The truth is however, that what we do here in the USA is worse. We consider an auction to consist of one participant – who ends up getting public resources at a firesale price of $1 per ton (which they turn around and sell 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.’ We on the other hand call it bidding and sell it for less. Which is the bigger scam? Who cares, in both countries the public is getting screwed.

But here’s the rub, India’s coal-gate is still unfolding. The report named the beneficiaries of the scam who were a veritable who’s who in the Indian corporate world. From the infamous Ambani-owned Reliance, to ‘good-neighbor’ Tata, to the Adani’s and their record of legal violations household corporate names received these public gifts.

Sometimes these corporate houses even received U.S. financial support for coal gate 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 undue 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.

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. The sheer gall it took to stand in public and make these claims is jaw dropping but it’s not even the tip of the iceberg.

While they were busy attempting to gut all environmental standards and clearances when it came to mining (not to mention further privatize coal mining and thereby further enrich themselves) 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 which breaks this dirty fuels ‘social contract’ but not apparently its financial contract. 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 they are asking for a bailout. The political timing would be laughable if regulators were prepared to stand up for the common man, not the industry. Instead, just like Prime Minister Singh, they are falling in line to defend these ‘barons of industry’ by securing their requested bailout.

From India to the U.S., average citizens are getting screwed by the coal industry coming and going. They give these corporations their public assets for fire sale prices, then they let them raise their rates when they make bad business decisions. All the while we get sick from the pollution while the carbon burns our planet. Where’s Anna when you need him?

Our Indian friends and colleagues are rightly angry. Really angry. Mr. Singh, and Congress, should be very worried. But here in the U.S. we continue to auction off not just coal leases but oil and gas at next to nothing. The firesale must stop, but better yet, we must keep it in the ground entirely. No time better than the present, and no resources better than coal.  It’s time we ended coal-gate.

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.


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