Days after PM nod,12 MPs opposed bidding for coal blocks in 2004

Rao forwarded these letters with a covering note to the Prime Minister

Even as Prime Minister Manmohan Singh sought to introduce competitive bidding for coal blocks within months of the UPA coming to power in 2004 and approved a cabinet note to the effect in August that year,the move was opposed within days by a dozen MPs from across parties,it has now come to light.

The opposition by the MPs including five from the BJP and three from Congress is among the many the proposal has faced over the years,and has now turned into a major confrontation between the UPA and the opposition BJP after the CAGs controversial report on coal block allotments.

The 12 MPs opposed to the proposal,The Indian Express has learnt,wrote individual letters to the then minister of state for coal,Dasari Narayan Rao,pleading against changing the old system. Rao forwarded these letters with a covering note to the Prime Minister.

In the note,Rao supported the argument of the MPs and highlighted the disadvantages of competitive bidding. The PM,as minister in-charge,forwarded the letter to the coal ministry for comments,which government sources claimed has been misconstrued by the CAG as the PMO initiating a note on the subject. In its response,the coal ministry rejected Raos argument.

Of those 12,only Navin Jindal from the Congress and the BJPs Vishnudeo Sai from Chhattisgarh are still in Parliament. However,the 12 appeared to have acted in concert at that time,leading to considerable political pressure.

These MPs,largely from coal bearing states,had the same key argument that bidding would raise the cost of the blocks,leading to price escalation and eventually contribute to inflation. All of them unanimously underlined the transparency in the screening committee system and termed the effort for competitive bidding as illegal unless the Coal Nationalisation Act was amended.

Incidentally,Rao had also taken the line that attempts to change policy would meet stiff political resistance just like the NDAs attempt to legalise commercial mining by amending the Coal Nationalisation Act in 2000. These letters were used to amplify the argument.

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Rao was,however,overruled and the PM went by then Coal Secretary P C Parakhs suggestion to pursue the competitive bidding route,which subsequently faced more hurdles.

All 12 letters,sources said,were addressed to Rao and were written between August 26 and September 2,2004 while the PM had given the green signal to the cabinet note for competitive bidding on August 19. Most of these letters referred to a June 28,2004 meeting,where this policy change was floated among various stakeholders. These MPs claimed that most of those who attended that meeting had opposed the decision.

THE DOZEN MPs

BJP

* Ananta Nayak (Orissa),letter written on Aug 27,2004: Procedure of allotment of coal blocks may require some fine-tuning,otherwise its functioning well.

* Pannulal Mohle (Chhattisgarh),Aug 31,2004: Companies with technical expertise will suffer. The present system is better.

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* Kishan Singh Sangwan (Haryana),2 September,2004: The screening committee is a more transparent process. More than 45 blocks have been given through this process. There is no need for a change.

* The other two were Vishnudeo Sai (Chhattisgarh),who pleaded to remove any deficiencies in the screening committee process but not to change it,and then Rajya Sabha member from Jharkhand,Devdas Apte.

Congress

* Naveen Jindal (Haryana),August 27,2004: To my mind,nowhere in the world are coal mines or mines of other minerals allotted through competitive bidding. Companies with financial clout will be able to corner blocks. On the screening committee,he wrote that procedures may require fine-tuning but its otherwise functioning quite well. Jindal also wrote a second letter in his capacity as Executive Vice-Chairman and MD of the Jindal Group to hold the meeting of the screening committee soon because one of the blocks recommended for their company by the Chhattisgarh government and approved by the Steel Ministry and the Power Ministry had been hanging fire.

* T Subbarami Reddy,Aug 31,2004: He expressed concern at the screening committee not having met for nine months and said that any change to the system would give advantage to unscrupulous elements.

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* Churchill Alemao, August 27,2004: Making similar arguments as the others,he termed the screening committee process as transparent and judicious.

* The other four MPs belonged to smaller parties,but two of them – Ganesh Prasad Singh and Vijay Singh Yadav – were from Lalu Prasads RJD,which was a key ally in UPA-1. The other two were Ravindernaik Dharavrath from the Telangana Rastriya Samiti and Samajwadi Partys Raghuraj Shakya,now a MLA in Uttar Pradesh.