Coalgate: How PMO cut red tape to favour minister

Crony capitalism in the coal block allocations was not limited to private companies with right connections only, it extended to at least one of the ministers of the government. While inter-ministerial transactions are usually a long-drawn process, this minister managed a coal block for his family member within a day of his applying for it.

According to a letter produced by Rajya Sabha member Prakash Javdekar, Subodh Kant Sahay, Union Minister of State for Food Processing Industry (Independent charge) had written a letter to the prime minister on 5 February, 2008 seeking allocation of coal blocks to a company, which incidentally bears the initials, SKS. One of the family members of Sahay is said to be the director of the company.

The letter goes thus: “I would like to bring to your notice that M/S SKS Ispat and Power Limited have applied for two coal blocks for their steel plants in Chattisgarh and Jharkhand. A brief note in this regard is enclosed. I shall be grateful for your personal intervention in this matter,” Sahay wrote to the prime minister.

Next day, on 6 February, the Prime Minister’s Office (PMO) sent a “most immediate” note signed by a Director, Ashish Gupta, to the Coal secretary saying “please find enclosed for action as appropriate a copy of a letter submitted to the Prime Minister by Subodh Kant Sahay, Union Minister of State for Food Processing Industry (Independent charge), along with a note regarding allotment of two coal blocks to M/S SKS Ispat and Power Limited for their steel plants.”

According to a statement regarding allocations submitted in Parliament by the Coal Ministry, SKS Ispat and Power Limited was allocated block no 46 in Fatehpur on 6 February 2008, the same day the note was sent from the PMO to the Coal Secretary. This case could be a shining example of lightening speed at which inter-ministerial works are done when the government wants them to be done.

However, according to report in CNN-IBN, Sahay has alleged that the BJP of not telling the truth and that the Delhi High Court has cleared him in this matter.


Javedkar also informed that none of the 70 coal blocks allocated to 145 private parties between 2006 and 2009 has begun production so far. This information was based on the written reply from Minister of State for Coal, Pratik Prakashbapu Patil, to a question from Javdekar.

The reply also reveals that 55 private players which were allotted 21 coal blocks as early as January-April 2006 have not started producing coal even after the expiry of more than six years. Similar is position for 17 coal blocks allocated to 19 companies in 2007, 19 coal blocks to 40 companies in 2008 and 13 coal blocks to 31 companies later.

The official statement given by the Coal Ministry defies the defence put forward by the two most articulate senior ministers in the government, P Chidambaram and Kapil Sibal, that various clearances from different ministries take a period varying between 36-48 months before the first coal could be mined from the first block.

To another question whether the steel, cement and power plants which were supposed to have benefited from allocation of coal were ready for production, the coal minister in his reply said “production of the coal from the blocks is yet to be synchronised with the commissioning of associated specified end use projects.”

The opposition BJP is already making an issue of it, rubbishing government’s claim that the coal blocks were allocated for growth in GDP and cheaper power to the people.

Updated Date: Aug 28, 2012 22:35 PM

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