Coal block controversy: A news round-up

For the 12th straight day, Parliament on Thursday was disrupted over the issue of coal block allocations.

On Thursday, in a counter-offensive, a large number Congress workers in Orissa clashed with the state police demanding the resignation of state chief minister Naveen Patnaik, alleging that his government made recommendations regarding the allocation of coal blocks.

On Tuesday, the Central Bureau of Investigation (CBI) began raids on at least five companies—Vani Iron and Steel Udyog Ltd, Jas Infrastructure Capital Pvt Ltd,AMR Iron and Steels Pvt Ltd, JLD Yavatmal Energy Ltd and Navabharat Power Pvt Ltd—that were allocated coal blocks. The CBI also filed a first information report (FIR) against a Congress member of Parliament Vijay Darda and his brother Rajendra Darda, a Congress minister in the Maharashtra government. They, along with Manoj Jayaswal, are the promoters of Jas Infrastructure.

On Thursday, citing documents, New Delhi Television (NDTV) said that the Darda brothers and Jayaswal “appear to have made windfall gains" from coal blocks allocated in Chhatisgarh, Jharkhand and Bihar.

At least 152 coal blocks had been allocated between 2004 and 2009, as per a response given by the coal ministry to a Parliament question. Between 1993 and 2011, a total of 195 blocks were allocated to private and government companies.

Prime Minister Manmohan Singh was in charge of the coal ministry for a part of this period, from November 2006 to March 2009.

In fact, as early as 18 March 2008, Mint had first reported about significant irregularities in the award of coal blocks to some 31 companies, nine of which had been rejected in earlier stages of the bidding process for not meeting rules prescribed by the government.

On 27 August, Prime Minister Manmohan Singh said that while he took “full responsibility" for the decisions of the coal ministry, the observations made by the Comptroller and Auditor General (CAG) regarding the coal block allocations were “clearly disputable."

“The policy of allocation of coal blocks to private parties, which the CAG has criticised, was not a new policy introduced by the UPA (United Progressive Alliance). The policy has existed since 1993 and previous governments also allocated coal blocks in precisely the manner that the CAG has now criticised," the Prime Minister said in his government’s defence.

“The UPA made improvements in the procedure in 2005 by inviting applications through open advertisements after providing details of the coal blocks on offer along with the guidelines and the conditions of allotment," he added.

On 2 September, in a blog post, former deputy Prime Minister and BJP Lok Sabha member, L.K. Advani rejected the Prime Minister’s “poor defence of ‘Coalgate.’ "

“It is now universally acknowledged that allowing discretionary allocation of precious resources like spectrum, oil, gas and minerals gives ample scope to people harbouring corrupt and collateral intentions," Advani wrote in his blog.

The CAG report on coal block allocations that was tabled in the Parliament on 17 August, said at least 57 private companies made a gain of Rs1.86 trillion.

The auditor has been critical of the allocations, primarily on three counts.

First, it had observed that the screening committee that was set up to oversee the allocations did not follow a transparent and objective process.

It further stated that competitive bidding could have been introduced in 2006 itself. It said that administrative procedures could have been quickly amended by the government, rather than going in for a lengthy legal process.

Third, CAG said the delay in the introduction of competitive bidding meant that the bidding process was beneficial to private companies.

Interestingly, CAG had, in its draft report first reported by The Times of India on 22 March, said that the undue benefits due to “windfall gains" amounted to as much as Rs10.7 trillion, nearly six times the Rs1.76 trillion figure it had estimated as the presumptive loss in the allocation of 2G spectrum. The draft report had listed 76 private companies as beneficiaries.

On 5 September, Mint reported that it tried to track down 93 small, mid-sized and obscure companies that have been allocated coal blocks by the government.

There, however, appear to be differences within the government on the question of scrapping the allocation of coal blocks.

Although an inter-ministerial group looking into this is likely to give its recommendation by 15 September, The Indian Express reported on 3 September that coal secretary S.K. Shrivastava had objected to the panel’s view recommending that blocks allocated to the Naveen Jindal-owned Jindal Steel and Power Ltd, on which no mining had occurred, should be taken back. The panel is headed by additional coal secretary Zohra Chatterji, who, as per the report, disagreed with Srivastava on the issue.

An NDTV report said the BJP’s stand on the issue could be diluted because the Chhattisgarh CAG had indicted SMS Infrastructure, a company promoted by BJP Rajya Sabha MP Ajay Sancheti, who, the news channel said, was “known for his proximity" to BJP president Nitin Gadkari. The Chhattisgarh CAG had said in April that the allocation of coal blocks to SMS Infrastructure had cost the exchequer Rs1,000 crore, NDTV said.