EMTA: Meteoric Rise from Rags to Riches

The Dubrajpur incident has brought a seldom heard name – EMTA – into the limelight in West Bengal. This private player in the coal industry has given a full page ad in the most widely circulated morninger wishing everyone a ’Happy Diwali’, in response to the present uncertainties after the villagers protested violently against the land acquisition for setting up an open cast mine at Loba village. The quick rise of EMTA is striking. Ujjal Upadhyay, the proprietor of the company was a small time contractor for CIL(Coal India ltd) & SAIL, involved in sand mining. In less than two decades, the assets of his company have reached a staggering 1,500 crores, emerging as the country’s biggest mining operator, controlling over 17 coal blocks in the country, with geological reserves of over 2.5 billion tonnes of coal. After CIL and the Naveen Jindal Group, EMTA has the third largest share of coal reserves in India, with a (grossly undervalued) net profit of Rs 50 crore in 2011-12. It has developed mining Joint Ventures (JVs) with 5 state power utilities and three other governments.

Behind this rise from rags to riches, lies the story of EMTA’s proximity to Chandan Basu (son of late Jyoti Basu) and the LF government’s role through which Ujjal Upadhyay amassed a fortune. During the LF regime and under the tenure of Sankar Sen as MIC in power, EMTA became the owner of the coal mines which had been allotted to the State Electricity Board or other power utilities after 1996. The entry process of EMTA is also highly suspicious. It appears that the Board of the state utility simply selected EMTA as a JV partner, without issuing tender notices. The West Bengal Power Development Corp formed JV’s with EMTA in the name of Bengal Emta Coal Mines Ltd. EMTA and the state utilities have a 74% and 26% equity stake respectively. Thus EMTA became the first private-public coal mining JV in the power sector. In fact, most of the JV agreements has given EMTA a sweeping provision to enjoy exclusive rights on all future mines that might be allotted to all these state entities. As the latter does not have the capacity to extract coal from the mines allotted to them, lacks both capital & mining expertise for coal excavation, EMTA, which in industry parlance is a mere mine developer and operator, ties up and channelises the lion’s share of profit to its coffers.

Let us conclude with an observation made in the Economic Times: ‘In a sector where private players have been allowed only to supply to their own projects, EMTA is a notable exception of a private entity that neither belongs to the state nor does it have any downstream presence. Its meteoric rise is the result of a government policy that effectively allows private players a backdoor entry in coal mining and an ingenious business model.’ An ideal example of nationalizing the losses and privatizing the profits!

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