No Coalgate if PM Manmohan Singh had stuck to his guns: Former Coal Secretary PC Parakh

Written by fe Bureau | New Delhi | Updated: Apr 15 2014, 21:50pm hrs
CoalPM okayed auctions, but PMO listed problems with the process. Reuters
PRIME Minister Manmohan Singh had approved the auction route for allocation of captive coal blocks in August 2004 and asked the then coal secretary PC Parakh to ready a Cabinet note for this, but later vacillated and let the junior coal minister sabotage the proposal, the former bureaucrat claims in his book Crusader or Conspirator Coalgate and Other Truths, released on Monday.

Parakhs account of policy-making between June 2004 and January 2006 (he retired in December 2005) suggests that Singh could not veto even lightweight ministerial colleagues like Shibu Soren and Dasari Narayana Rao and implement competitive bidding, that would have averted Coalgate. Or did he lack the courage of conviction to scrap discretionary

allocations, given the view of industry and colleagues that auctions would jack up costs

Parakh argues auctions would not jack up costs indeed, they would create more competition and these were just ruses to delay transparent auctions.

Parakhs revelations follow a controversial book by the PMs former media aide Sanjaya Baru, where he said Singh often failed to exercise authority, doing the bidding of Congress president Sonia Gandhi.

Parakh was later named by the CBI for alleged irregularities in allocating coal blocks to Hindalco.

Explaining how Soren, Rao and the PMO torpedoed the attempt to replace the practice of allocating coal blocks by a screening committee with bidding, Parakh said: It is clear from the sequence that neither the industry nor the political system wanted a transparent and objective procedure. Every possible effort was made to delay the introduction of open bidding until all the fully explored good blocks had been allocated.

The coal ministrys screening committee had allocated 57 blocks with combined reserves of 6.3 billion tonnes to private companies between 2004 and 2009. During most of this period, Singh held the portfolio.

Parakhs contends the fear of auctions raising costs for users was unfounded as Coal Indias price would have served as a cap. After some wrangling with the then MoS Rao, Parekh got the auction proposal approved by Singh in August 2004. He claims that while the PM asked him to prepare a Cabinet note suggesting the bidding mechanism, he soon received a PMO note, enumerating the problems of such a system, which he believes, was based on an unsigned note given by the minister of state (Rao) to the PMO.

Rao, and subsequently Soren, who endorsed the formers opinion, managed to stall the proposal for long. Parakh, however, resubmitted the Cabinet note to the PM on March 7, where he also, as per an earlier decision taken at the PMO, indicated that all applications received by the cut-off date of June 28, 2004 would be disposed of by June 2005 under the extant mechanism.

While the PM asked Parekh to modify the note to address states concerns, a final note was submitted to him through Rao on June 21. Rao, alleges Parakh, sat on the file till the latter retired in December 2004, and returned the file to the his successor on January 12 with the noting that the PMO had taken the view that the required amendment to Coal Mines Nationalisation Act (CMN Act) is a time-consuming exercise and has allowed the department to proceed with allocation of captive coal blocks under the extant mechanism. 20 coal and lignite blocks are already put on offer and are under process and as such, there is no immediacy in (introducing auction). Clearly, if Parakh is right, the PMO did not show the will to implement the auction route.

Rao, according to Parakh, sought to create confusion by introducing irrelevant issues. The minister sought to link auctions to the Bill to amend the CMN Act 1973 pending in the Rajya Sabha (which is actually meant to allow commercial coal mining by private players and hanging fire for lack of political consensus) where the amendment required for launching the auction route for captive coal mines was minor one. Parakh claims the amendment could have been done through the ordinance route as well.

In January 2005, Rao thwarted the PMO-approved modified proposal to implement auctions only prospectively by linking the issue to the Mineral and Mines (Development and Regulation) Act, which proposes bidding for allocation of other minerals and nodal ministry for which is the mines ministry.