Friday, 24 August 2012

Shri Jaiswal/Shri Chidambaram/Shri Khursheed: Defending the Indefensible

Below are the Points raised by the three wise men of UPA. I am not convinced and following are the reasons:
ARGUMENT : These are coal mines. how can there be a presumptive loss when coal mines are buried deep within mother nature? The loss only comes into effect in relation to mined coal, not to coal which is still buried in mother earth? If it is not yet mined, there is no loss.
1.       Coal is an asset. Its value will multiply with time. A Company that has some cash reserves and wants to invest that money would certainly like to Invest it into a coal mine. And that is what was done. Those companies Invested in those coal mines as anybody does in Stocks/Gold/Land or any other asset type.
2.       Once the coal mines auctions will start it will lead to an increase in the Asset Value and then those companies will then Liquidate those Assets. They are bound to make a bounty on those Assets as they were given to them on Throw Away Prices.
3.       Has the Price of that very Coal Mine increased since it was allotted? Yes it is bound to increase as it is an Asset.
4.      Please sell me land. I will not use it for any purpose for next 10 years. After 10 years I will sell it at a price of 100 times to a genuine Land Developer.
5.       What was the charge for which Yedurappa resigned?  He gave land at throw away Prices.

ARGUMENT: The coal is still there
1.       This is the very reason this is a scam.
2.      What is the value of a Coal Mine? The Value of a coal mine is determined by the amount of Coal and Quality of Coal in the Coal Mine.
3.      Why has then coal still not been extracted? Simple the Miners are waiting for the Base Price of Coal to Increase.
4.      When will the Base Price of coal increases? Once this Auction policy is put in Place.
5.      How? When Auction will start, companies will give higher Price to Acquire the Coal Mines. When companies will invest more money, hence at the time of selling, the Base Price of coal will automatically increase.
6.      This is when these companies who have been given Coal Mines will make a Killing. Then they will start with the Mining Process.  And this is when they will sell the same coal acquired at a throw away Price to be sold at a Higher Market Price.
7.      And this is the Reason why the coal is still there in the Mines as companies don’t want to take it out until the Coal Auctions.
8.      Is there a cap on the Pricing of Coal for these Companies?  I don’t think so; these companies will be selling coal at the Market Price.

ARGUMENT: The government is not in the business of trading in coal. It is in the business of promoting power, steel and cement sectors
1.       On one side they say no Coal has gone from the coal Mines. How have the power, steel and cement sectors then have benefitted from the Allocation of these Mines.
2.      Let me repeat: Once the coal will go out of the coal Mines then the power, steel and cement sectors will buy coal from the very coal mines at market Price.
3.      And the market price will be set by the Price of Coal that will be sold by Mines that will be auctioned in Future.
4.      As Explained above those mines will sell coal at a very high Price. Hence there will be no Benefit to the Said Sectors.
5.      These sectors will only benefit if the government had the Agreement with those Mines that they will sell coal at much lower Price.
6.      But this cannot be done as those companied need to make a Killing.

ARGUMENT: The states agreed to the New Policy once it was agreed that all the Money and the Royalty will go to the states.
1.       This is the reason why UPA wants to allocate as many coal Blocks as fast as Possible before the New Policy arrives.
2.      As Once the New Policy arrives then the states will benefit and UPA will be left with nothing.
3.      Probably this is the reason why UPA also delayed the policy for so many Years and this time around UPA wanted to make the Killing before the Auction Process.

Please note we have still not discussed how the Market Values of the companies’ increases once they are allocated a Coal Mine.


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