The letter from the ministry, dated December 27, 2013, a copy of which is with The Indian Express, is a response to the preliminary inquiry filed by the CBI.
After the Talabira II allocation in which an FIR has been filed this is the second coal block awarded to the Kumar Mangalam Birla group, in a joint venture with Essar, that's now being probed by the CBI.
"The ministry had recommended to the ministry of coal the allocation of Mahan coal block to Essar Power. As per available records, the power ministry has not recommended Hindalco for the block, the letter reads.
As per the rules of the inter-ministerial screening committee which took the final call on allocations blocks were to be given out to companies only on the basis of recommendations made by the state government concerned or the end-user departments, in this case the power ministry.
Under CBI scrutiny is the sequence of events which, investigators claim, show that the allocation to Hindalco allegedly violated norms. Records accessed by The Indian Express show that Hindalco got the Mahan block despite its 2004 application being rejected by the power ministry and, significantly, twice by the Madhya Pradesh government as well.
Consider the following:
* In August 2004, Hindalco's application was rejected by the power ministry
* In November 2004, coal ministry invited Hindalco to ask for Mahan
* In response, Hindalco applied for the block in December 2004, but the Madhya Pradesh government rejected it
* On March 1, 2005, Hindalco and Essar made a presentation to the 27th screening committee
*On March 16, 2005, coal secretary PC Parakh wrote to Madhya Pradesh chief secretary Vijay Singh to reconsider the state position and support Hindalco
*On March 23, 2005, Singh wrote back again, saying a state-level secretary level committee has rejected Hindalco and favoured Essar for the block
*The 29th meeting of the screening committee in June 2005 supported Hindalco and Essar as joint venture partners
* In September 2005, both companies were called to the coal ministry and told to work the mines together
*On April 12, 2006, the block was allocated to a joint venture between the two with a shareholding of 60:40 for Essar and Hindalco
When contacted, Hindalco said: "We cannot comment on the Madhya Pradesh government's decision as we are not privy to all facts." It has also stated that the allocation of Mahan "was done in the most transparent manner and following all the requisite regulatory processes.
Parakh said he had no recollection about the allocation as it happened a long time ago.
Normally, recommendations from state governments and end-user ministries were considered. In any case, the state government representatives were present at the meeting."
But another former coal secretary, Alok Perti, said allocation requests for blocks had to be sent mandatorily to the concerned state governments or the line ministries. "Only then could the screening committee take them up, based on their views."
Parakh, incidentally, has been booked by the CBI, along with Kumar Mangalam Birla, in October last year for alleged "criminal conspiracy" in the allocation of Talabira II coal block in Orissa's Ib Valley. He has strongly denied those charges, saying the recommendations were backed up by the PMO.