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Selling off coal blocks was legal, says union coal secretary

The coalgate controversy may have not spared even the PMO, but those who profited by selling away coal blocks allotted in their name continue to escape the heat. Unlike them, beneficiaries of 2G spectrum were pulled up when they sold stakes in companies originally allotted the air waves. In this case, the coal ministry appears rather protective towards the firms saying it is awaiting a reply from law ministry

Some of the companies from Nagpur, which were among the first beneficiaries of earlier policy of discretionary allotment, sold away the blocks they got for a pittance for hefty profits. This money could have easily come to the government. With the coalgate drama at its a peak, union coal secretary S K Srivastava was in the city on Monday for an official visit to Western Coalfields Ltd (WCL). Asked about the case, he said the terms those days did not bar change of ownership or sale. "The matter is being looked into by the law ministry," said Srivastava. When asked whether the coal ministry had formed any view on the matter so far, the answer was a terse, "we cannot go beyond the law."

Govind Daga and Mohan Agrawal, who promoted a company B S Ispat and secured a coal block in its name, reaped gold out of the mine. The promoters secured a block in their name by paying a a few lakh rupees. A year ago, they sold the entire stake to another company Oriental Castings Ltd (OCL). Technically the company allotted the mine did not change but its owners did. As much as Rs 280 crore changed hands in the deal. Three more companies including, Virangana Ispat, Field Mining and Grace Industries changed hands too.

However, even as coal ministry has been issuing show-cause notices to the new owners for not developing the coal blocks so far those who profiteered have not been touched yet.

Later, briefing about other developments in the ministry, Srivastava stated now with the system of competitive bidding in place, the first auction for two coal blocks was planned for January. "In the new system, the government will explore the mines before putting them on the block. A proper exploration will help in setting the base price for mines," he said. Under earlier policy of discretionary allotment, those who got the mine had to themselves conduct further exploration.

However, getting an environmental and forest clearance will remain the buyer's responsibility even under the new regime. "It is an extensive process so, it is better left to the bidders themselves. Of course, they have an option of returning the block in two years if things do not work out," said Srivastava.

Fate of 30 allottees to be decided on Oct 24, 25

The inter-ministerial group (IMG) is meeting on October 24 and 25 to decide the fate of 30 companies allotted coal blocks. The firms have been issued show case notices for reasons why the blocks could not be developed. A decision will be taken by IMG after hearing them, said Srivastava. Thirty six private players allotted blocks had started production and their combined output for the year stood at 50 million tonnes, he said.

Source: The times of India