By Sandeep Sahu
Bhubaneswar: Contrary to his current position on the allocation of coal blocks to private parties, Odisha Chief Minister Naveen Patnaik’s government not only opposed competitive bidding but also strongly recommended allocations to influential private players. The chief minister himself suggested the allocation of coal blocks in certain cases.
After the Comptroller and Auditor General’s report on coal allocations became a political issue, Patnaik has been saying that his government has been in favour of auctions all along. A 2005 letter from the state government to the Centre seems to contradict this.
“Our state government has been asking for an auction-based system for the allocation of mineral resources, including coal, I repeat, including coal, for the last few years,” Patnaik had said on 23 August. His statement was in the context of Union Coal minister Sriprakash Jaiswal’ s charge the day before that an auction-based system could not be worked out for coal primarily because of stiff opposition from non-Congress governments in five coal-bearing states, including Odisha.
But, in a letter dated 25 July 2005, the then Commissioner-cum-Secretary of the Industries Department of Odisha government, GC Pati, wrote in clear, unambiguous terms: “The state government does not support the proposed change from the existing practice of allocating coal blocks through Screening Committee to a competitive bidding process.” This letter was produced by Union Minister of State for Chemicals and Fertilisers, Srikanta Jena, before the media a few days ago.
The case against competitive bidding, as suggested through Pati’s letter, essentially rested on two arguments. First, it would put existing investors in the mineral sector, who had not been allotted coal blocks, at a serious disadvantage. And two, it would prevent the state from ‘leveraging’ its coal reserves to accelerate industrial development.
The letter, written to KV Pratap, Deputy Secretary in the Prime Minister’s Office (PMO), was in response to the PMO’s letter dated 15 July 2005 seeking the state government’s views on the proposed changeover from an allocation-based system to an auction-based one. But Jena did greater damage to Patnaik’s claim of probity and transparency than Jaiswal by ferreting out another letter, this time written by no less than the chief minister himself, recommending the allocation of the Utkal B-1 coal block in the Talcher coalfields, which had already been allocated to Talcher Mining Pvt Ltd in 1997, in favour of Jindal Steel and Power Limited (JSPL).
The CM’s letter, written to the then Union Minister of State for Coal and Mines Ravi Shankar Prasad on 6 February 2002, gave a fair idea of what exactly Pati meant when he talked about ‘leveraging’ the state’s coal reserves!
Jindal’s, however, was not the only case recommended for coal block allocation by the Patnaik government. Between 2003 and 2009, it had recommended as many as 22 coal mines to 39 companies which constituted a virtual Who’s Who of corporate India: the Jindals, the Tatas, Reliance, GMR, Arcelor-Mittal, Lanco and ACC being some of the more illustrious names.
The state government could have ‘leveraged’ its coal reserves much better if it had, instead of opposing auctions, made a case for a sizeable share of the revenues from the auction to be given to them, points out an industry watcher.
There were no more rejoinders forthcoming from Patnaik after Jena produced the two damning letters. The newly-inducted Minister of State for Industries and Mines, Rajanikant Singh, was offered as the sacrificial lamb to the media which was seeking an official response to the allegations of Jena. Singh merely managed to say that there could be nothing wrong with a government recommending the case of a company setting up industry in the state.
The more suave Kendrapara MP Baijayant ‘Jay’ Panda, the face of the BJD in Delhi’s television studios, put it more articulately by talking about ‘dovetailing’ the coal block allocation to the state’s policy of ‘value addition’. But neither of them answered the fundamental question: why did the CM claim that his government had actually been ‘asking for an auction-based system’?
Cornered by the media at last, Naveen Patnaik had only this to say; “I think the CAG has castigated the central government and not the state government.”
To Naveen Patnaik’s credit, however, it must be said that he acted in the nick of time to avoid being blackened by the coal scam. As the first sketchy reports of the allocations scam began to tumble out of the woodwork, his government suddenly developed cold feet and asked for a series of clarifications from the Centre on the 32 coal blocks allocated in the state. It also held itself back from signing mining leases with the companies which had already managed to get the statutory clearances. In the process, it saved itself from more embarrassment than what it being subjected to currently.