Prime Minister Manmohan Singh fights back

Justifies overruling official panel's decision in controversial Birla coal case

Prime Minister Manmohan Singh today broke his silence on the controversial issue of allocation of Talabira coal blocks in Odisha to Hindalco Industries in 2005, justifying the decision while taking full responsibility for it.

The case deserved a review of an earlier decision of the screening panel that had rejected the application of Aditya Birla Group’s flagship, an elaborate statement issued by the Prime Minister's Office (PMO) said, five days after the Central Bureau of Investigation (CBI) registered an FIR against industrialist Kumar Mangalam Birla, former coal secretary P C Parakh and Hindalco.

In effect, today's statement has confirmed that the PM, who at that point held additional charge of the coal ministry, was indeed the decision-making 'Competent Authority' in the Talabira coal block allocation case. "The Prime Minister approved the proposal on October 1, 2005," the PMO statement says. The 14th FIR in the coal case had mentioned 'Competent Authority', leaving it open to varied interpretations.

 The FIR on Tuesday alleged criminal conspiracy and abuse of official position. Subsequently, Parakh told the media that the PM, too, to be made a “co-conspirator” for being the final decision-maker. Birla had on Friday met Finance Minister P Chidambaram and discussed the issue.

“The Talabira coal allocation is a case where the final decision differed from the earlier recommendation of the Screening Committee. This was done following a representation received in the PMO from one of the parties, which was referred to the coal ministry,” the statement read. Singh also said he was satisfied that the final decision taken in this regard was entirely appropriate and is based on merits of the case.

The CBI said in its FIR, 14 th in the alleged Rs 1.86 lakh crore coal allocation scam, that Parakh overturned the recommendation of the screening committee and made Hindalco a joint allottee in the allocation after his meeting with Birla while the final decision was taken by the “competent authority”. Parakh was not available for comment on the PM’s reply.

Singh delved into the detailed sequence of events in his statement to counter the allegations leveled. He said Birla’s request, received in May 2005, was forwarded to the ministry which replied back justifying the screening panel decision in favor of NLC on two counts – Hindalco had already been squatting over an existing coal linkage from MCL and the two public sector units can develop the blocks in a JV. Birla had, however, argued that Hindalco was the first applicant and the state government had also recommended the Aluminium major’s name for allocation.

The PMO had received a letter from Odisha Chief Minister Naveen Patnaik in August requesting preference for Hindalco as Aluminium projects, as against power plants, generate more employment and lead to growth of the manufacturing sector. The PMO then forwarded the proposal to the ministry again which recommended clubbing the two blocks and developing them as a JV with 70% stake of MCL, and 15% stake each of NLC and Hindalco.

The PM gave his approval on 1 October in view of the state government’s recommendation, Hindalco being the first applicant and finding merit in the ministry’s equity sharing formula of 15% each between NLC and Hindalco. While the arrangement reduced satisfaction level (of coal supply) for NLC, the gap in its coal availability was sought to be filled with linkage from Talabira III reserves.

How PM trashed allegations:

* Asserts screening panel’s decision rejecting Hindalco’s application deserved review

* Reasons Birla was first to apply for the block as early as 1996.

* Invokes provisions governing mineral rights for Centre-State concurrence in MMDR Act in light of Naveen Patnaik’s recommendation.

* Argues ministry’s proposed equity structure between MCL, NLC and Hindalco held merit.

* Contrary to CBI’s FIR, PM says equity structure satisfies each company’s requirement as gap in NLC’s demand would be filled by Talabira III.