HT Explainer | How Punjab sand mines auctioning got mired in muck?

Updated on Jun 05, 2017 08:55 AM IST

The “sandstorm” has not only pushed the government on the back foot, but has also given an opportunity to the Opposition to go after it. HT dissects the issue:

The mining contract row has pushed the government on the back foot.(HT File Photo)
The mining contract row has pushed the government on the back foot.(HT File Photo)
Hindustan Times, Chandigarh | By, Chandigarh

The Punjab Congress led by Captain Amarinder Singh came to power with the promise of clean administration and zero tolerance to corruption. In one of its first decisions, it decided to e-auction sand, gravel mines in a transparent manner to end mafia. But the two-day auction of mines, after which the state government had made claims of mega success, got embroiled into a controversy involving a “powerful” minister and big politicians. The “sandstorm” has not only pushed the government on the back foot, but has also given an opportunity to the Opposition to go after it. HT dissects the issue:


A total of 89 sand and gravel quarries were auctioned on May 19 and 20. After the mines were auctioned at Rs 1,026 crore, the state government went to town, but the auction tuned into a fiasco on May 23 when the directorate of mining received upfront money of Rs 310 crore for only 41 mining sites. The other bidders backed out. The reason: Some bidders, in a bid to outsmart their competitors, gave high bids, disturbing the business dynamics. The bids were so high that the price of a truck full of sand from some of the sites would have come to lakhs. But the big blow came when power and irrigation minister Rana Gurjit Singh was accused to bagging sand mines through former employees, including a cook, who gave bids running into tens of crores despite having meagre monthly incomes. While the minister has repeatedly denied having any stakes in mines, the allegations have left the state top brass redfaced. Some other Congress and Akali MLAs had also taken part in the bids.


Besides the revenue from the sand mines, the 10-week-old Congress government’s image has been hit. The fund-starved state government was hoping to get revenues from the auction, but availability of cheap sand and making all 89 mining sites operational would be a challenge now. While 41 quarries were successfully auctioned and would become operational in June, the remaining 48, which did not get bidders or where the successful bidders did not pay the first instalment, would now be auctioned next week.


Having promised decartelisation of sand and stone business to free it from mafia in its manifesto from the state assembly elections, the Congress government, eager to show a break from the past, was jubilant after bids to the tune of Rs 1,026 crore for the mine sites. Compared to the earnings of Rs 30 crore from the auction of mine sites during the previous Shiromani Akali Dal-Bharatiya Janata Party (SAD-BJP) government, the e-auction was a money-spinner. Despite the controversy, the government continues to claim that its earnings from the mining sites, which have been successfully auctioned, would be 10 times more.


During the previous government, mining sites were auctioned for five years by way of reverse bidding system with a cap on the bid price. However, the new government chose progressive bidding system on annual basis. Bidders competed with each other, giving high bids, and several of them later backed out. To top it all off, politicians, including MLAs, connected with the ruling party got involved, seeing an opportunity to make money. The charges of benami bidders have tainted the auction process, leading to demands for action, inquiry and cancellation of dubious bids.


Quick to dismiss the allegations at the outset, the state government on Monday ordered a judicial inquiry to probe the allegations of “benami” bids against Rana Gurjit due to mounting criticism and growing unease in the party. On the mining policy front, there is no change, though. The government has announced that it would not amend the policy, as it has chances of earning good revenue from mining sites’ auction. “We are looking at all the aspects, and also trying to deal with the situation. Our procedure is transparent and we are accepting e-payments,” said additional chief secretary, industry and commerce, DP Reddy. As for “benami” bids, he said it is for the Enforcement Directorate and the income tax department to look into sources of funds deployed by bidders.


The Aam Aadmi Party (AAP), which has demanding the minister’s sacking, has rejected the judicial commission. The party has decided to intensify antigovernment protests on the “mining scandal”. With the first budget session of the new government in June, the opposition parties might not let the house function smoothly.


    Gurpreet Singh Nibber is an Assistant Editor with the Punjab bureau. He covers politics, agriculture, power sector, environment, Sikh religious affairs and the Punjabi diaspora.

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