PMO defends coal block allocation to Birla's Hindalco firm

Days after the CBI registered a formal complaint in allocating a coal block to Hindalco in Odisha, Prime Minister Manmohan Singh's office Saturday defended the government's decision, saying it was "entirely appropriate" and based on merit.

"The prime minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him," the PMO said in a statement.

Breaking its silence over the allocation of Talabira coal block to Hindalco, the PMO accepted that the decision was different from what the screening committee recommended, but said it was taken following "a representation" it received from one of the parties, which was referred to the coal ministry.

The Central Bureau of Investigation (CBI) has filed an FIR against former coal secretary Prakash Chandra Parakh and industrialist Kumar Mangalam Birla for alleged irregularities and criminal conspiracy in the allocation of the two blocks.

Parakh, however, said it was Prime Minister Manmohan Singh who decided the allocation of two coal blocks in Odisha in 2005 over which the CBI has filed FIRs.

The statement also clarified that "no impediment" is being placed on the CBI to continue the investigation and seek fresh information which may have a bearing on the case.

"The investigation on this and other matters must take their normal course under the law," the statement said.

The Prime Minister's Office said the CBI is free to investigate the case and it will be monitored by the Supreme Court.

"The investigation on this and other matters must take their normal course under the law," the statement said.

As per the details provided the PMO, Manmohan Singh received a letter dated May 7, 2005 from Aditya Birla group chairman Kumar Mangalam Birla requesting allocation of Talabira-II and III coal blocks in Odisha to Hindalco for its 650 MW captive power plant in its Integrated Aluminium Project in Sambalpur District, Odisha and for a 100 MW captive plant for the expansion of its Hirakud Aluminium plant in Odisha.

The letter was acknowledged by the Prime Minister, who also held coal portfolio during that period. Manmohan Singh noted on the letter- "Please get a report from Coal Ministry".

The letter was then forwarded to the coal ministry and accordingly appropriate action was taken.

In a letter to the prime minister, Odisha Chief Minister Naveen Patnaik had also suggested that the coal block be allotted to Hindalco.

"While the file was being processed in PMO, the prime minister received a letter dated 17.8.2005 from the chief minister of Odisha on the allotment of Talabira-II to Hindalco," the PMO said.

"The CM's letter mentioned that the state government had assigned topmost priority to the allocation of Talabira-II to Hindalco and had strongly supported the case in the steering committee meeting," it said.

According to the sources, CBI is planning to question Naveen Patnaik in the case.