IMG was authorised to recommend cancellations

The government’s decision to deallocate four coal blocks today followed intense deliberation. The run-up to the marathon meetings of an inter-ministerial group (IMG) headed by Zohra Chatterjee, additional secretary in the coal ministry, was not easy. The IMG, which includes officials from the finance, power and steel & heavy industries ministries, walked a tightrope of punishing the laggards which delayed production from the mines allocated to them, without hurting investment.

Earlier this month, the finance ministry had cautioned any decision on the matter would have both legal and financial implications, and could lead to international arbitration. “Therefore, the IMG is not a competent authority to take a call on the future course of actions on these blocks. It should be best left to the administrative ministry to decide each case on its merit,” Prabodh Saxena, joint secretary (infrastructure and investment), had written in a curt letter to Chatterjee.

Saxena had taken over the infrastructure assignment recently, while earlier, too, an inter-ministerial review committee, headed by the coal secretary, had deallocated about 25 blocks. An IMG under the additional secretary was set up after the Budget announcement by then finance minister Pranab Mukherjee. “An IMG is being constituted to undertake periodic review of the allocated coal mines and make recommendations on deallocations, if required,” Mukherjee had said in his Budget speech.

That the IMG clearly had a daunting task ahead of it was hinted in Saxena’s letter as well. “Relying on presentations to be made by the allocatees without such a certification (from a competent authority) is not advisable,” the letter read.

Saxena’s fears stem from the fact that unlike the cancellation of 2G telecom spectrum licences, which were linked only to roll-out obligations, deallocation of coal blocks is not limited only to bringing the mines into production mode; it means setting up end-use plants as well. The allocated captive coal blocks were linked to notified captive uses like steel and iron, cement, power and coal-to-liquid.

What provoked Saxena to write the letter, however, was something entirely procedural. The finance ministry director concerned had received the agenda of the IMG meetings late. In fact, the director could not attend the meeting because the notice was received after the meeting was over.

Besides, it is difficult for a ministry representative to form an opinion on an important issue before carefully examining the facts of the case, before a meeting.

The IMG’s terms of reference authorise it to recommend deallocation of blocks. Since September 6, the group has met thrice to hear officials from private companies explain the reasons for the delays in production. Yesterday, the group held a meeting after 9 pm. Based on its recommendations, the government deallocated four blocks today. “The IMG would continue the examination of the remaining cases in its next meeting, scheduled to be held on September 14. It would hold further meetings, as may be required, for completing the recommendations,” stated an official release.