PMO backs allocation of coal to Hindalco

Says PM is competent authority to clear the proposal

The Prime Minister’s Office (PMO) on Saturday defended the allocation of coal blocks to Aditya Birla Group’s Hindalco, saying that it was done on “merits.”

The prime minister was “the competent authority” to clear a proposal mooted by the Coal Ministry in 2005, the PMO said in a detailed clarification.

Former coal secretary

P C Parakh recently claimed that it was Prime Minister Manmohan Singh who cleared the allocation to a joint venture of Hindalco and the public sector unit Neyveli Lignite Corporation.

The Central Bureau of Investigation (CBI), without naming the prime minister, had said in its first information report (FIR) that a proposal to change a screening committee’s decision was sent to “the competent authority,” which agreed with Parakh. Singh held the coal portfolio then.

The PMO tried to put the onus on the Odisha government, saying that under the federal framework of sharing mining rights, both Central and state governments need to concur before an “allocatee” can be granted a mining lease.

“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 on the eve of Singh’s official visit to Moscow.

Parakh had questioned the CBI case by arguing that if he and industrialist Kumar Mangalam Birla were guilty of conspiracy, so were former minister of state for coal Dasari Narayan Rao and the prime minister, since the allocation could not happen without their signatures.

According to the sequence of events released by the PMO, the prime minister received two representations from Birla in one month, the first on May 7, 2005.

Birla wanted that Talabira II coal block in Odisha be given to Hindalco for a 650-MW captive power plant at its integrated aluminium project in Sambalpur and another 100-MW plant for expansion of its Hirakud aluminium plant. It was forwarded to the Coal Ministry.

While the file was being processed by the PMO, Singh received a letter on August 17, 2005, from Odisha Chief Minister Navin Patnaik, mentioning that “topmost priority was assigned to the allocation of Talabira II to Hindalco.”

The chief minister’s letter mentioned that aluminium plants should be given priority over independent power units as they generate more employment, create more wealth for the country and add to the growth of the manufacturing sector directly, the government’s clarification stated, dragging Patnaik into the controversy.

PMO stand

*The prime minister was satisfied that final decision on Hindalco was “entirely appropriate”

* 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

* Decision was based on merits of the case before prime minister: PMO

Time Line

* May 2005 -PM Manmohan Singh receives a letter dated May 7, 2005 from Kumaramangalam Birla on coal block  allocation. PM notes on the letter, "please get a report from Coal Ministry".
* May 25, 2005 -PMO forwards the letter to Coal Ministry.
* June 17, 2005 -Birla writes another letter to PM
repeating the request. PMO again refers the letter to Coal Ministry with a request to send their report on the matter.
* August 2005 -Coal Ministry sent its file to PM, which mentions that the Screening Committee had considered three major contenders for allocation of Talabira-II, and decided to allocate this block to Neyveli Lignite  Corporation (NLC).
* August 17, 2005 -PM receives letter from Odisha Chief Minister Naveen Patnaik recommending allocation for  Birla company Hindalco.
* August 29, 2005 -PMO returns file to Coal Ministry with a comment about Patnaik's letter demanding re-examination of the matter. PMO asks Ministry to resubmit file.
* September 16, 2005 -Coal Ministry resubmits file with the proposal that two coal blocks Talabira II and III be mined as a single mine with the mining done by a joint venture formed between MCL, NLC & HINDALCO. 
* October 1, 2005 -Prime Minister approvs the proposal. (ENDS)