CoalGate: CAG does not let Manmohan, PMO off the hook

The final CAG report on CoalGate makes it clear that ManmohanSingh's PMO had played a key role in delay coal block auctions

Raman Kirpal August 17, 2012 14:57:55 IST

The Comptroller and Auditor General's (CAG's) 'final' performance audit report on the allocation of coal blocks has not absolved Prime Minister Manmohan Singh of responsibility. Singh was the Minister of Coal between 2006 and 2009 apart from being head of the government as PM.

The tone and tenor of the 'final' CAG report remains more or less the same as it was in the draft report. But one explicit charge made in the draft report was changed. The draft report read: "The Ministry of Coal continued to follow the Screening Committee route for subsequent allotments till date with the approval of the Prime Minister's Office (PMO)."

CoalGate CAG does not let Manmohan PMO off the hook

Not let off. PTI

This explicit allegation is missing in the final report. In fact, it has given the sequence of events for readers to draw their own conclusions. The conclusion remains the same - that the PMO was equally responsible for the delay in deciding on the auction policy in the case of allocation of coal blocks to private parties.

The final CAG report clearly reflects the fact that Manmohan Singh had agreed to introduce competitive bidding for the allocation of coal blocks on 14 October 2004, but his office indulged in adopting delaying tactics, so much so that even today it is awaiting the law ministry's opinion in fixing the auction policy for coal.

"It was decided in a meeting with the Prime Minister on 14 October 2004 that coal blocks will be allocated on competitive bidding. All applications received till 28 June 2004 would be allowed to pass through a Screening Committee, which used to allocate captive coal blocks without any fee and just on the recommendations of the state government or the Union ministry," the CAG report says.

However, this did not happen. "The PMO, in a note dated 9 August 2005, added, "the Cabinet note put up by the Ministry of Coal for competitive bidding as a selection method for allocation of coal and lignite blocks for captive mining will be amended to take into account the concerns of the state governments where the coal block is located."

The PMO again added that his government would bring an amendment to the Mines and Minerals (Development and Regulation) Act (MMDR) 1957 to introduce a competitive bidding policy for coal and all other minerals.

This delayed the allocation of coal blocks in competitive bidding.

Since July 2004, 155 coal blocks were allocated to various government and private parties through a Screening Committee process, which lacked transparency and objectivity. The windfall gains for private parties are pegged at a whopping Rs 1.86 lakh crore, much more than the loss incurred in the 2G scam, earlier dubbed as the biggest scam of the decade so far!

The CAG report argues that the Secretary (Coal) then did point out that the present system of allocation of coal blocks was not objective and fair and was subjected to pulls and pressures from top political quarters. And thus the auction method could be introduced through the administrative desk.

A decision that coal mines would be auctioned was taken on 28 June 2004. It was merely an administrative decision and could be done without any amendment. "There was no legal impediment for the introduction of transparent and objective process of competitive bidding for allocation of coal blocks for captive mining as per the legal opinion of July 2006 of the Ministry of Law and Justice and this could have been done through an administrative decision," the CAG report said.

The following sequence of events clearly pinpoints the PMO's role in delaying the process.

The PMO forwarded a note dated 11 September 2004 detailing certain disadvantages of in allocating coal blocks through competitive bidding.

The PMO directed (1 November 2004) that no ordinance is required for auctioning of allocation of coal blocks, as the change in the policy for captive mining will be made effective prospectively. "It would be appropriate to bring in the required amendment through a Bill to be moved in the coming Parliament session."

Manmohan Singh as Minister of Coal stated on 25 February 2005 that the proposal for auctioning of coal mines should not be "proceeded further", as he "was in complete agreement" with the views that the proposal for competitive bidding would further delay the allocation of blocks. Also, Manmohan Singh does not agree with the view that the Screening Committee could not ensure transparent decision. Thus the old system should be pursued.

Secretary (Coal) still put up a note for the PM's approval (as Minister of Coal) of the draft Cabinet note, insisting that auction is a must for transparency in the allocation of coal blocks. The PMO said on 16 March 2005 that the draft Cabinet note be updated and sent back urgently.

PMO, through a note dated 9 August 2005 ensured that the Ministry of Coal would continue to allot coal blocks for captive mining through the existing Screening Committee till the new competitive bidding procedure becomes operational.

The PMO, in a meeting on 7 April 2006, desired that it would be more appropriate to make an amendment in the Mines and Minerals (Development and Regulation) Act (MMDR) 1957 so that the system of competitive bidding could be made applicable to all minerals covered under the said Act. So now the issue was not only coal, but all other minerals.

Endorsing the views of the Minister of State for Coal, the PM now says (27 April 2006) that the issue to amend the MMDR Act should be revisited as it involved withdrawing the current powers of state governments and it had the potential to become a controversial issue.

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