Shri Praveen Sood
Shri Keshav Chandra
Shri Rahul Naveen
Dear S/Shri Sood, Keshav Chandra, Naveen,
Earlier, I addressed the Cabinet Secretary vide my letter of October 16, 2023 (https://countercurrents.org/2023/10/allegations-of-over-invoicing-of-imported-coal-by-the-adani-group-and-others-and-its-adverse-impact-on-electricity-consumers-interests-call-for-an-independent-judicial-enquiry/) about allegations of over-invoicing by some business houses, of coal imported by Central and State power utilities and their adverse impact on the electricity consumers. I am aware that some Central investigating agencies undertook investigations on it and the latest allegations add credence to them.
There have been more allegations emerging about coal imports, this time specifically about fake certification of quality in the case of coal imported by India from Australia.It is reported that “coal companies in Australia ‘are knowingly using fraudulent quality reports for their exports’. ‘This has allowed them to falsely claim, for years, that Australian coal is cleaner than coal from elsewhere, even though it’s often simply not true. This shocking misconduct includes exports to Japan, South Korea, China and India” (https://www.smh.com.au/politics/federal/australia-s-cleaner-coal-is-a-systematic-export-scam-wilkie-to-tell-parliament-20221120-p5bzog.html)
It is further reported, “Testing laboratory ALS Ltd said on Thursday an investigation found that about half the certificates it provided for export coal samples over the past decade had been manually altered to improve the quality of the commodity….The assay reports, going back to 2007, had been amended at four laboratories of the coal superintending and certification unit of ALS’s Coal business in New South Wales and Queensland states, it said in a statement to the Australian Stock Exchange….Australia, which is known for its high-quality coal, is the world’s biggest exporter of fuel to markets like Japan, South Korea, China, Taiwan and India…..The ALS unit has about 40% of the market for testing coal samples to ensure shipments meet quality standards agreed with buyers, according to industry estimates…..The issue came to light earlier this year after allegations in an unfair dismissal case that Australian miner TerraCom Ltd had worked with ALS’s Brisbane-based testing laboratory to falsely upgrade the quality of its coal in export documentation. TerraCom denied the allegations” (https://www.reuters.com/article/us-australia-coal-als-idUSKBN21K06B)
In a related report (://www.consultancy.com.au), it is indicated, “They’re paying bribes to representatives of their overseas customers to keep the whole scam secret. And this has allowed them to falsely claim, for years, that Australian coal is cleaner than coal from elsewhere, even though it’s often simply not true,” Wilkie alleged in parliament on Monday, with a number of fellow independent MPs including former Boston Consulting Group principal Kate Chaney backing his calls for an enquiry.” According to Central Electricity Regulatory Commission’s Staff Paper on Review of Composite Index used for Computing the Escalation Rate for Imported Coal for Bid Evaluation and Payment (6/2023) [https://cercind.gov.in/2023/Approach_paper/Staff%20Paper%
20on%20Review%20of%20methodology%20for%20Composite%20Index.pdf], the share of steam coal imports from Australia has been insignificant till the year 2019-20, while, in the last 3 years, it has increased to 6-7% (though in the year 2021-22, it increased up to 13%, again came down to 7% in the year 2022-23).
It is possible that power companies in India either deliberately or otherwise failed to subject Australian coal to independent quality certification and, if there were instances of lower quality coal being received, penalise the importers appropriately.
Considering that the Central Ministries, indirectly responsible for the prevailing coal shortage, forced State power utilities to import coal, which has resulted in a sellers’ market, over-invoicing of the price of coal imported, compounded by false quality certification as alleged in the case of Australian coal, these allegations assume considerable importance as it appears that both public and private power utilities overpaid for imported coal and passed on the costs to unwary electricity consumers, which suggests the possibility of fraud and money-laundering.
May I request you to get further details from your counterparts in Australia, investigate these allegations and bring all those responsible for the improprieties?
E A S Sarma
Former Secretary to the Government of India