Coal scam: CBI to probe role of PSU officials

Written by Rajat Arora | New Delhi | Updated: Oct 3 2012, 08:25am hrs
The Central Bureau of Investigation (CBI) will further widen the scope of its investigations into the coal block allocation scam by looking into the role of officials of Central and state sector PSUs, including NTPC, SAIL and a host of state mineral development corporations.

These utilities had got allocation of captive coal blocks from the Centre between 1993 and 2009 under the special dispensation route for government companies.

The agency has initiated the process of seeking the nod from several state governments to probe the alleged roles of senior officials of state-run PSUs," said a source.

No separate permission is required for Central sector PSUs. Without the permission of state governments, the CBI, under the present jurisdiction, cannot initiate probe against any state-owned public sector company or department.

Last week, the premier investigating agency had registered a preliminary inquiry into allocation of captive coal blocks to state-owned mineral corporations and PSUs that have formed joint ventures with private sector companies for extraction and sale of the mineral.

There have been instances where after retiring from the PSUs, senior government officials joined private firms, with which the PSU had a JV, as a director or consultant. Companies owned by close aides of prominent politicians were also allocated a coal block by entering into a JV with a state-owned firm. The agency will be probing all such cases, a source said.

Around 72 coal blocks out of a total of 195 were allocated to several state and Central-owned PSUs since 1993.

It has been alleged that senior officials of these PSUs favoured several private companies and businessmen by forming joint ventures with them to develop coal mines, which were allocated to PSUs. Under current rules, private players are prohibited from acquiring mines to extract and sell coal in the open market. They have been using an innovative arrangement with state mining corporations to do the same.

Under this arrangement, the coal ministry awards a mine to a state mining corporation. The corporation, in turn, floats a JV in which it holds a majority stake as sweat equity, but makes no investment. A private player holds a minority stake, but handles all operations and earns huge profits. The CBI, probing the allocation of 195 coal blocks made to 289 companies, including 99 PSUs, till now has filed three preliminary inquiries and has registered FIRs against seven private firms.