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Odisha turns coal heat on Centre

The Odisha government deepened UPA-2's discomfort over Coalgate by bluntly telling the Supreme Court that the Centre blatantly and continuously violated the existing legal framework by unilaterally allocating coal blocks bypassing the views of the states.

The Odisha government's argument can have implications for the CBI investigation into a coal block allotted to industrialist Kumar Mangalam Birla's Hindalco where the Prime Minister's Office has leaned heavily on a recommendation by the state to justify altering the original allocation to public sector Neyveli Lignite.

The Naveen Patnaik government's stand brought PMO in sharp focus as the Odisha government brought on record the CM's letter to Prime Minister Manmohan Singh protesting allocation of a coal block to private firms despite the state pitching for a public sector undertaking. The allocation deals with the period when Singh held charge of the coal portfolio in 2006-09.

Responding to the apex court's notice to it and Jharkhand, Chhattisgarh, Maharashtra, Andhra Pradesh, Madhya Pradesh and West Bengal, the Odisha government said it had recommended to the Centre to allot Patrapara coal block to state PSU Odisha Mining Corporation (OMC).

"The same block was allotted to private sector applicants Bhushan Steel and Strips, Adhunik Metaliks, Deepak Steel and Power, Adhunik Corp, Orissa Sponge Iron, SMC Power Generation, Sree Metaliks and Visa Steel," the state said.

Odisha's submission can mean that the allocation of a coal block to Hindalco was an exception and perhaps came about as the Centre held the same view. The Centre has claimed it was duty bound to give due weight to Odisha's view, a yardstick the state clearly feels did not apply in other cases it recommended.

"The CM had written to the prime minister on March 6, 2006 raising objections to the process of allocation of (Patrapara) coal block without seeking any formal recommendation from the state government," the state said.

The Centre had taken the stand before the Supreme Court that it had acted in accordance with law and its decision to allocate coal blocks to private parties meant merely meant grant of letter of intent, which was not even a bankable document.

"Allotment (of coal blocks) is nothing but identification. Allotment, at the highest, can be a letter of intent and confers no right on allottees to start mining. The letter is not a bankable document," attorney general G E Vahanvati had told a bench of Justices R M Lodha, Madan B Lokur and Kurian Joseph on September 25.

"Allotment, allocation or identification letter is only the first step towards obtaining mining lease and that by itself cannot be construed to be giving away of natural resources. It is only a step towards identification of coal blocks which is a duty cast on the Union government," he had said.

Given this stand, the bench had asked, "If this is the position, then what is the hue and cry all about? What is the debate all about?" It then had decided to issue notice to the seven states having coal reserves to know the exact position. Odisha government said once the identification was done by the Centre through allocation of coal block, the state could do little to reverse it.

It complained that though the state had the largest coal reserves, coal blocks allotted in favour of Odisha PSUs and end-use projects under implementation in the state was "far less compared to allocations made in favour of PSUs of certain others states/end-use projects in other states".

The Odisha government said its CM had been continuously writing to PM Singh for last eight years, bringing to his notice the disproportionate and unplanned allocation of coal blocks and the consequential "social and environmental impact, which had to be addressed by the state alone". The CM had also brought to coal ministry's notice the diversion of coal to projects other than the ones for which the block was allotted.

The Odisha government said two legislations -- Mines and Mineral (Development and Regulation) Act, 1957 and the Coal Mines Nationalization Act, 1973 -- governed allocation of coal blocks. Under these laws, "applications for grant of prospecting licence or mining lease for coal will have to be filed with the state government having jurisdiction over the applied area".

"The state government may recommend to the Centre one or more applicant for grant of prospecting licence or mining lease over the applied area. The role of central government would arise only after it receives recommendation for prior approval from the state government and not prior there to," it said.

However, it added, "The allocation of coal blocks was made by the central government from 1993 to 2012 by evolving its own mechanism by constituting a screening committee, which framed its own guidelines and also followed the guidelines framed by the ministry of coal from time to time. It is apparent that the central government exercised pervasive control in the matter of allocation of coal block and consequently grant of mining lease." The state also annexed several letters from the CM to the PM from 2006 till 2011.

The role of the PMO had come in sharp focus after the CBI registered an FIR against former coal secretary P C Parakh and Aditya Birla group's Kumar Mangalam Birla for the allocation of Talabira coal block to a joint venture between two PSUs after Hindalco was drafted in as a partner in the JV.

The CBI had found sudden reversal of the earlier decision not to allot coal block to Hindalco suspicious, warranting formal investigations. But the PMO had cited the Naveen Patnaik government's recommendation in favour of Hindalco as a reason for the change of decision.

Source: The Times of India