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Millennium Post

When all sides agreed to allocate coal without auction

A large chunk of the monsoon session of Parliament was lost in the din of the opposition demanding Prime Minister Manmohan Singh's resignation over the Comptroller and Auditor General [CAG] findings on coal block allocations. But, the details now emerging suggest that when the policy for this allocation was being debated in 2005, the daggers were not as sharply drawn as they are now. 

Documents available with Millennium Post show that on 25 July 2005, both the state governments as well as the power ministry had agreed that competitive bidding of coal blocks should not be the way forward. The meeting was chaired by the then principal secretary to the prime minister, T K A Nair, and attended by the officials from the Planning Commission, power ministry, coal ministry, steel ministry, Department of Industrial Policy and Promotion [DIPP] and the representatives from various states. The document indicates that during the meeting, a proposal was made that 'only fully explored blocks would be put up for bidding'.

R R Shah, a member sceretary of the Planning Commission had said that the 'auctioning of coal blocks after environmental clearance will enable value addition and will be reflected in the increased bid price for captive coal blocks'. But, he was countered by P C Parakh, the then secretary of the coal ministry. He said, 'Private bidders would be in a better position to secure [environmental clearances].' R V Shahi, a secretary in the power ministry, opposed the auction by arguing that the policy would increase the cost of power for the end user.

The document shows that the final decision taken at this meeting called by the Prime Minister's Office was that the Coal Mines Nationalization Act, 1973, would 'need to be amended before the proposed competitive bidding procedure became operational' and in its absence the earlier policy of allocation be continued.
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