Dr. Manmohan Singh is the Prime Minister since May 2004 and was
personally in-charge of the Coal Ministry from November 2006 to May
2009. Under his watch a major coal allocation scam took place which
allowed private firms to make windfall gains, as is clear from the facts that
are now out in the public domain and the report of the CAG.
The average allotment of coal blocks was 3-4 per year until a few years
back. But this number shot up drastically to 22-24 during 2006-09 when
Dr. Singh was in charge, raising questions about the manner in which
these allotments were made. All the allotments were made without
transparency, without protecting the interest of public exchequer, and
without any competitive process.
A comprehensive note on competitive bidding for the allocation of coal
blocks was given by the Coal Secretary to the Minister of State for Coal on
16 July 2004. It noted the substantial difference between the price of coal
supplied by Coal India Limited (CIL) and the cost of coal produced through
captive mining. This ensured a "windfall gain" to the party which was
allocated a captive block. That same month, the Minister of State sought
clarification on what he feared would be "likely opposition from the power
sector". The Coal Secretary was explicit that the existing system of
allocation, even with modifications, would not be able to achieve the
objectives of revenue maximisation, transparency and objectivity in the
allocation process. However, rather than accept this advice, in September
2004, the PMO forwarded a note detailing what it claimed were certain
disadvantages of the proposed system. Subsequently, the Coal Secretary
remarked that "there was hardly any merit in the objections raised" by the
PMO. The secretary also highlighted some of the "pulls and pressures"
experienced by the screening committee during the decision making
process and stressed that all pending applications were recommended on
the basis of competitive bidding, and that allocations should be made on
such a basis. This recommendation was ignored by the PMO.
The CAG draft report remarked that steps could have been taken to
allocate coal blocks through competitive bidding well in September 2004
itself.
In October 2004, the MoS again argued that the proposal for competitive
bidding may not be pursued as the Coal Mines (Nationalisation)
Amendment Bill 2000 was pending in the Rajya Sabha with stiff opposition
from trade unions. He also disagreed with the opinion that the screening
committee could not ensure transparent decision making. He said that this
was "not an adequate ground for switching over (to) a new mechanism".
The matter was once again put before the PMO, after which, 28 June 2004
was decided as the cut-off date for considering applications as per the
current policy rather than the proposed policy.
In March 2005, the Coal Secretary again put up a note to the PM stating
that if the revised system was not put in place quickly enough, pressure
would again mount on the government for continuing with the existing
procedure. Subsequently, the PMO in August 2005 asked the coal ministry
to amend the Coal Mines (Nationalisation) Act 1973 before the new system
became operational. "Since this was likely to take considerable time it was
decided that the coal ministry would continue to allot coal blocks for
captive mining through extant screening committee procedure till the new
competitive bidding procedure became operational," the note states. Again
in November 2005, the MoS said that the PMO had taken a view to amend
the Coal Mines (Nationalisation) Act, which was a "time consuming
exercise and as such allowed the department to proceed with the existing
system" ... "there was no immediacy..."
In April 2006, it was decided to amend the MMDR Act so that the system
of competitive bidding could be made applicable to all minerals. Later on,
delaying the matter further, the MoS opined that the issue of amendment
should be "revisited" as it had the potential to become controversial.
Finally, the bill to amend the MMDR Act was introduced in Parliament in
October 2008 and passed in August 2010.
While the amendment to ensure coal allocation by auction remained in
abeyance because of the Dr. Singh’s interventions as head of the Cabinet
and in-charge of the coal ministry, 24 blocks were allocated in 2005, 53 in
2006, 52 in 2007, 24 in 2008 and 16 in 2009. Interestingly, post-
amendments, only one coal block was allocated in 2010, and not even one
in 2011.
Obviously there was a rush for coal blocks allocated under the old, non-
competitive, system. As on June 2004, only 39 coal blocks stood allocated.
"But since July 2004, 155 coal blocks were allocated to government and
private parties following the existing process. The CAG in its draft report
has pegged the losses running in lakhs of crores. A copy of the relevant
chapter of the report is annexed as Annexure A. It is understood the final
report is similar to the draft report. The final report though has been
submitted to the Government, the Government chose not table it in the
Budget session of Parliament.
The above facts clearly show that the Dr. Singh abused his position to give
huge pecuniary benefits to private parties, which is an offence under
Section 13 of the Prevention of Corruption Act. Therefore the said matter
needs a thorough independent investigation.
