The Telegraph
Tuesday , April 15 , 2014
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Parakh throws a punch at PM

P.C. Parakh at the launch of his book in New Delhi on Monday. Picture by Yasir Iqbal

New Delhi, April 14 : Prime Minister Manmohan Singh has been accused of failing to “counter vested interests within his own government and party” to bring in coal block auctions in time, leading to serious irregularities in coal block allocations in a book written by former coal secretary P.C. Parakh which was released here today.

Parakh, who retired as coal secretary in December 2005, has lambasted Singh as “weak” and said “he was unable to counter vested interests within his government and party.”

“The government’s inability to take a right decision at the right time has resulted in Coalgate and subsequent CBI investigations … to save its skin, the government has resorted to hasty and arbitrary cancellations of allocations,” Parakh said in his book Crusader or Conspirator?

“The PM was not able to control his ministers,” Parakh said today with more than a trace of bitterness at the book launch here today.

The book also slams JMM leader Shibu Soren and Congress leader Dasari Narayan Rao for delaying the process of introducing a system of open bidding for coal blocks.

This is the second book released in the past week that portrays Manmohan Singh, Prime Minister since 2004, as a well-intentioned man of high personal integrity but one often unable to assert his authority.

The other book Accidental Prime Minister by Sanjaya Baru, a former media adviser to Singh, had claimed the Prime Minister allowed his authority to be undermined by UPA chairperson Sonia Gandhi.

Writing about the coal allocation policy which was later attacked by the Comptroller and Auditor General of India and in a court case before the Supreme Court, Parakh said he and the Prime Minister had both agreed on a system of allocating coal blocks through open bids to steel, cement and other companies which used coal as feed-stock, instead of a system of allocations by a screening committee which both feared could lead to arbitrary decision-making.

Parakh’s book lays out in details how minister for coal and JMM leader Shibu Soren and minister of state (MoS) for coal Dasari Narayan Rao from the Congress party, time and again scuttled his proposal to introduce open bidding for coal mines. After months of struggle, the Prime Minister approved open bidding for coal blocks on August 20, 2004.

However, soon afterwards, “we received a note from the PMO enumerating possible problems with moving to open bidding. It is understood this note was based on an unsigned note given by the MoS … simultaneously, a number of letters started pouring in from MPs, including one from Naveen Jindal, who had considerable interests in coal mining.”

“The MoS tried to create confusion and delay the process of decision making by introducing irrevelant issues, Mr Shibu Soren later used this noting of the MoS to reverse the PM’s decision to introduce open bidding,” Parakh said.

“Rao and Soren joined forces to kill the proposal at creating a transparent and objective method of allocation of coal… I concluded that there was no political will to proceed with the bidding route …”

Ever since coal was nationalised as part of series of Socialist era diktats in 1973, the coal mines in India have mostly been run by the state run Coal India Ltd. However, to make life simple for the large number of steel mills, coal fired power plants and cement factories which mushroomed after India chose to open up the economy in 1991, the government decided in 1996 to allocate captive coal mines to private companies.

The allocation was done on the basis of applications made against open advertisements and on recommendation by states by an inter-ministerial group of bureaucrats including representatives of state governments.

The screening was supposed to take into account coal mining technical knowhow with the applicant group, financial strength, the state of the steel or power project which the coal mine was to feed.

However, the process has been attacked as one that bred crony capitalism.

Besides being castigated by the CAG which has estimated that it has led to a loss of Rs 1.86 lakh crore to the national exchequer, it has led to the CBI filing first information reports against Parakh and several top firms including Kumar Mangalam Birla’s Hindalco, Jindal Steel and Power and Rathi Steel and Power Ltd. Parakh was accused of benefitting Hindalco with decisions made by the Screening Committee.

Parakh acknowledges that the process of allocations was not free from pulls and pressures. “It is naïve to say that no pressure was exerted when thousands of crores of rupees worth of resources were up for grabs. Pressures came in the form of enticements such as post-retirement assignments, partnerships in business, bribery, blackmail or pure intimidation.”

He, however, defends allocation of a coal block to Hindalco, which later led to the CBI filing FIRs against him and Birla.

Parakh says that though a coal block at Talabira II and III in Odisha was initially given to state-run Neyvelli Lignite Corporation, Hindalco and the Odisha government sought reconsideration.

“The chief minister for Odisha (Naveen Patnaik) … was against the allocation of the block to NLC which, according to him, would export power to other states and leave behind pollution in Odisha. His clear preference was for Hindalco which would add value generate employment and revenue within the state.”

The government then decided that Talabira II and III should be mined as a single mine with the mining done through a joint venture formed between Mahanadi Coalfield Ltd, NLC and Hindalco, with shareholding in the ratio 70:15:15.