The Supreme Court's cancellation of all captive coal blocks since 1993 has a come as a shock to businessman and Congress politician Naveen Jindal, who is the single largest beneficiary of captive coal allotments, nine in all.
The court in its order had said that the allocations were "illegal" and "arbitrary".
In an exclusive interview to NDTV, Mr Jindal admitted that the Court's order was a 'setback' for companies which have mined coal for the past 20 years to generate power and make steel, and now been told that what they are doing is illegal, while they have been creating wealth for the country.
But Mr Jindal's own company, JSPL, is amongst several being probed by the CBI in what is known as Coal-gate scam, of corruption in the allotment of coal blocks. Specifically, the CBI and the Enforcement Directorate has alleged that JSPL paid kickbacks of Rs 2.25 crore to the then Minister of State for Coal Dasari Narayan Rao through a series of front companies in exchange for being allotted a coal block in Jharkhand.
Mr Jindal told NDTV " I vehemently deny that there was any quid pro quo". Asked about the money trail, he said that one of the Jindal companies had lent money to an unrelated company, which in turn invested in a company in which the Mr Rao had a controlling stake. As he put it, "one of our companies had lent money to this company on interest and that money was returned to us in 2011. Nobody is denying that we lent money, it was our company which had given a loan to a company. That company which had taken loan had invested in that company, which we learn now. So what they do with their money, we don't control that. "
Mr Jindal also said that he will be unable to pay a one-time penalty the court has imposed on all coal blocks that are under production to compensate for the windfall profits they have made. In his case, the estimate is around Rs 2000-3000 crore. "We will not be able to pay it" he said, "because we have not made a provision for it".
But just one of Mr Jindal's power companies, JPL which is receives coal from his by his captive coal block posted profits of Rs 2001crore in just one financial year, 2010-11.
According to the power ministry's guidelines, captive coal allottees get cheaper coal and are meant to pass on the benefits to the consumer by entering into long term power purchase agreements, which keep power tariffs low.
Jindal, however, sells power at market rates, hence the high profits. When asked, Mr Jindal said "we are in a market economy, I will sell power at whatever is the market rate. I have to be most competitive whether I am supplying to someone through a PPA or a whether I am selling in the merchant market, they buy whoever is selling at the most competitive rate at that time."