PM defends coal block allocation to Hindalco

Justifies overruling official panel's call

Prime Minister Manmohan Singh on Saturday broke his silence on the controversial issue of allocation of Talabira coal blocks in Odisha to Hindalco in 2005, justifying the decision and taking full responsibility for it. The case deserved a review of an earlier decision of the screening committee 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, the statement confirmed the PM, who then held additional charge of the coal ministry, was indeed the decision-making "Competent Authority" in Talabira coal block allocation. "The prime minister approved the proposal on October 1, 2005," the statement said. The 14th FIR in the coal case had mentioned "Competent Authority", leaving it open to interpretations.

The FIR on Tuesday alleged criminal conspiracy and abuse of official position. Subsequently, Parakh, the then coal secretary, told the media that the PM, too, should 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 by 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 based on merits of the case.

CBI had said in its 14th FIR in the alleged Rs 1.86-lakh-crore coal block allocation scam that Parakh overturned the screening panel's recommendations 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 sequence of events in his statement to counter the allegations. He said Birla's request, received in May 2005, was forwarded to the ministry, which replied justifying the screening panel decision in favour of NLC on two counts: Hindalco had already been squatting over an existing coal linkage from MCL and the two public-sector firms could develop the blocks under a JV.

Birla had, however, argued 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, generated more employment and led to growth of the manufacturing sector. The PMO then again forwarded the proposal to the ministry, which recommended clubbing the two blocks and developing those under a JV, with MCL having a 70 per cent stake, and NLC and Hindalco 15 per cent each.

The PM on October 1 gave his approval 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 per cent 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.