Srikant Jena, Naveen Patnaik

Bhubaneswar, Aug. 23: The Naveen Patnaik government finds itself in a spot on the issue of allotment of coal blocks in the state.

Documents related to coal block allotment have revealed that the state government had not only opposed the system of competitive bidding for the purpose, but also made recommendations in favour of at least one private company.

The documents, which have surfaced, belie chief minister Naveen Patnaik’s claim that his government had for the past sometime been asking for an auction-based system (read competitive bidding) for the allocation of mineral resources, including coal.

The issue of allotment of coal blocks has stirred a nationwide controversy with the CAG report tabled in Parliament on August 17 stating that there has been an estimated loss of Rs 1.86 lakh crore because of coal block allocation without auction from 2005 to 2009.

Union coal minister Sriprakash Jaiswal further fuelled the controversy, saying that the bidding process for coal block allocation could not be implemented because of stiff opposition from five coal-rich states including Chhattisgarh, Rajasthan, Odisha and Bengal that apprehended impact on coal prices.

His statement today drew sharp reaction from Naveen, who said that coal was a subject on which the Centre had complete authority.

Naveen went on to say that his government had been asking for an auction-based system for allocation of mineral resources, including coal, but the Centre did it only recently and that, too, in case of coal only.

However, a letter written on July 25, 2005, by the then state industries secretary, G.C. Pati, to the Prime Minister’s Office opposed the proposal for competitive bidding for allocation of coal mining blocks for captive use. Citing the reasons for the state government’s opposition to the proposal, the letter said such a move would put the existing investors, who had not been allocated coal blocks, at a serious disadvantage.

“Even the cases where the state government has signed MoU for investment in mineral-based industries based on the central policy will suffer,” the letter stated. It pointed out that the state government’s authority to recommend cases for allocation of captive coal blocks on the basis of investment would also be eroded by the proposal. “This will be a serious disadvantage for states with rich mineral resources,” the missive stated.

The letter further argued that the proposal would prevent states from leveraging their coal reserves to accelerate industrial development.

Union minister of state for chemicals and fertilisers Srikant Jena said Pati’s letter had exposed the Naveen Patnaik government’s doublespeak on the issue of coal blocks allotment.

“The chief minister is trying to mislead the people of the state on this issue,” said Jena, citing another letter written by Naveen in 2002 to the then Union minister of state for coal and mines Ravi Shankar Prasad for allotting the Utkal B-1 coal block in the Talcher coal fields in favour of Jindal Steel and Power Ltd.

Referring to Jindal’s then proposed sponge iron project, steel plant and a 100MW power plant in the state, Naveen’s letter to Prasad said: “Since allotment of Utkal B-1 coal block is very vital for setting up the aforesaid sponge iron/steel plant in the state, I would request your personal intervention in the matter and to consider allotment of Utkal B-1 coal block in favour of M/s Jindal Steel and Power Ltd on cancelling the prior allotment to M/s Talcher Mining Pvt Ltd.”

Sources here said the CBI had already written to chief secretary Bijay Patnaik seeking details of the recommendations made by the state government for allocation of coal blocks.