Manmohan Singh says coal block for Hindalco Industries was 'entirely appropriate'

ENS Economic Bureau Posted online: Saturday, Oct 19, 2013 at 0000 hrs
New Delhi : Owning responsibility for the Centre’s controversial decision to allot a coal block in Orissa to Kumar Mangalam Birla's Aditya Birla group firm Hindalco Industries, Prime Minister Manmohan Singh Saturday said that the allotment was “entirely appropriate” and was done on the merits of the case.

In a detailed statement that summarised the course of events that led to Hindalco Industries Ltd getting the Talabira block, the PMO also said that the allotment had been “strongly” supported by the Orissa government of Chief Minister Naveen Patnaik.

“Recommendation of the government of Odisha is important and had to be given due consideration while taking a decision in the matter,” the statement said.

The explanation came days after the CBI registered an FIR and accused Hindalco Industries Chairman Kumar Mangalam Birla and then coal secretary P C Parakh of criminal conspiracy in the case as the coal ministry had first rejected Hindalco Industries' application for the mine and then changed its mind and approved the allotment.

Parakh has since said that if he has been accused of wrongdoing and conspiracy in the case so should the PM be as it was Singh who had approved the allotment.

The PMO statement also came on the day the BJP’s prime ministerial candidate Narendra Modi slammed Singh over the controversy.

A PMO source said that while the 13 other coal cases being pursued by the CBI are about parties violating licence conditions such as selling of blocks, there was no such illegality in the case of Talabira.

“This is a case where (only) the final decision differed from the earlier recommendation of the screening committee, and this was done following a representation received in the Prime Minister’s Office from one of the parties, which was referred to the ministry of coal,” the statement said.

At the same time, the PM stressed that what he has to say should not create any “impediment” for the CBI “to continue the investigation and seek fresh information which may have a bearing on the case”. The investigation on this and other matters must take their normal course under the law, he said.

Singh’s communication adviser, Pankaj Pachauri, said the detailed statement showed “we have nothing to hide”.

Singh has also acknowledged that he permitted a deviation from his own guidelines on the percentage of share the Aditya Birla group firm could get in the joint venture with public sector coal companies.

Instead of Hindalco Industries getting a 7.5 per cent share it was doubled to 15 per cent by cutting down the share of Neyveli Lignite Corporation (NLC) as it was felt NLC could get the rest from the other joint venture partner, Mahanadi Coalfields. “This would fully meet the coal requirement of the two to set up their power project and protect their interests,” the statement said.

Singh said he received two requests from Kumar Mangalam Birla in May and June 2005 for reconsideration of the screening committee’s orders rejecting Hindalco Industries' application.

Kumar Mangalam Birla “requested (for) allocation of Talabira-II coal block in Odisha to Hindalco for its 650 MW captive power plant in its integrated aluminium project in Sambalpur district, Odisha and for a 100 MW captive plant for the expansion of its Hirakud aluminium plant in Odisha”.

The letters were sent by Singh to the coal ministry along with the recommendation made by the Orissa chief minister to give the coal blocks to Hindalco Industries to “take them on record, re-examine the matter in light thereof and resubmit the file”.

The coal ministry submitted a revised proposal in September which included Hindalco Industries as a 15 per cent JV partner.

The proposal cleared by Singh in October 2005 highlighted that the “chief Minister, Odisha had reiterated this position assigning topmost priority to the allocation of Talabira-II in favour of Hindalco”.

His position is key since under the MMDR Act a mining lease for coal can only be granted by a state with the previous approval of the Central government, “thus both need to concur before an allocatee can be granted a mining lease”.

The key reason of the screening committee to deny the block to Hindalco Industries, its existing long-term coal linkage with MCL for supply of coal, was to be correspondingly reduced.