Under attack from Team Anna, the Prime Minister's Office (PMO) issued a statement on Wednesday to clarify its stand on coal block allocation during the period 2004-2009.
In its press release, the PMO said that the clarifications regarding these issues had been placed on the website of the coal ministry on May 17.
Reiterating certain issues and giving further clarifications, the release says: "Allocation of coal blocks to private companies for captive use commenced in the year 1993 after the Coal Mines (Nationalisation) Act, 1973 was amended."
"This was done with the objective of attracting private investments in specified end uses... As the economy grew in size, the demand for coal also grew, particularly due to expansion in the energy sector. It was felt that Coal India Limited alone would not be able to meet the growing demand and, therefore, the option of giving a bigger role to the private sector was explored."
"While allocation of coal blocks began in 1993, it was only in 2004 that for the first time, the idea of making allocations through competitive bidding was mooted and in 2005 the government initiated a proposal to amend the Coal Mines (Nationalisation) Act."
"The delay of three years between initiating the process of legislative changes and introducing the amendment Bill in Parliament was mainly due to time taken in consensus building among divergent views of the various stakeholders. State governments such as Chhattisgarh, West Bengal and Rajasthan were opposed to the amendment," it states.
"Ministry of Power, too, felt that auctioning of coal may lead to enhanced cost of coal... The central government was always keen to quickly push through the changes. However, it could not have moved ahead without duly considering the concerns of various stakeholders."
"In the meanwhile, keeping in view the increase in applicants for coal blocks, the government evolved a consolidated set of guidelines to ensure consistency in allocation. In September 2005 the system was further improved bringing in greater transparency. In the improved system applications were invited through open advertisements against an identified list of coal blocks," it says.
"...it was felt that the required legislative changes would be time consuming... It would not have been prudent to disrupt the momentum of accelerated investments in coal sector, especially as it was felt that it would take time in bringing about the required legislative and the consequent procedural changes."
"If the coal blocks were not made available between 2005 and 2010, it would have resulted in higher imports causing outflow of foreign exchange and would have had deleterious effect on large investments in crucial sectors like power and steel... no coal block was offered for allocation after introduction of the Amendment Bill in Parliament," the release says.
"The allocation of coal blocks was never looked upon as a potential source for generating revenue for the central government. The intent of the government was to induce rapid development of infrastructure which was so very essential to keep the economy on a high growth trajectory. Hence the question of maximising revenue does not arise at all."
"The intent of the government was to involve the private sector to invest in identified infrastructure sectors in the interest of the country and its economy and, to this end; this developmental process was resorted to."
"The allocation of coal blocks to private sector companies is only for captive use and not for sale or commercial use of coal. Since the blocks are allocated to private companies only for captive purposes for the specified end-use, the question of linking the blocks to the market price/CIL price of coal does not arise at all," the PMO statement says.
"The coal blocks for captive end use were allotted on the basis of recommendations of a Screening Committee which followed a fair and transparent procedure giving equal opportunity to all applicants. The Screening Committee was a broad based body with representation from state governments at the level of the chief secretaries, concerned ministries of the central government and the coal companies," it adds.
"The process of allocation of blocks was equitable, fair and just which is borne out of the fact that there has never been any serious allegation against the working of the screening committee. The move to introduce competitive bidding is to make the selection process demonstrably more transparent," the PMO release concludes.
Source: India Today
In its press release, the PMO said that the clarifications regarding these issues had been placed on the website of the coal ministry on May 17.
Reiterating certain issues and giving further clarifications, the release says: "Allocation of coal blocks to private companies for captive use commenced in the year 1993 after the Coal Mines (Nationalisation) Act, 1973 was amended."
"This was done with the objective of attracting private investments in specified end uses... As the economy grew in size, the demand for coal also grew, particularly due to expansion in the energy sector. It was felt that Coal India Limited alone would not be able to meet the growing demand and, therefore, the option of giving a bigger role to the private sector was explored."
"While allocation of coal blocks began in 1993, it was only in 2004 that for the first time, the idea of making allocations through competitive bidding was mooted and in 2005 the government initiated a proposal to amend the Coal Mines (Nationalisation) Act."
"The delay of three years between initiating the process of legislative changes and introducing the amendment Bill in Parliament was mainly due to time taken in consensus building among divergent views of the various stakeholders. State governments such as Chhattisgarh, West Bengal and Rajasthan were opposed to the amendment," it states.
"Ministry of Power, too, felt that auctioning of coal may lead to enhanced cost of coal... The central government was always keen to quickly push through the changes. However, it could not have moved ahead without duly considering the concerns of various stakeholders."
"In the meanwhile, keeping in view the increase in applicants for coal blocks, the government evolved a consolidated set of guidelines to ensure consistency in allocation. In September 2005 the system was further improved bringing in greater transparency. In the improved system applications were invited through open advertisements against an identified list of coal blocks," it says.
"...it was felt that the required legislative changes would be time consuming... It would not have been prudent to disrupt the momentum of accelerated investments in coal sector, especially as it was felt that it would take time in bringing about the required legislative and the consequent procedural changes."
"If the coal blocks were not made available between 2005 and 2010, it would have resulted in higher imports causing outflow of foreign exchange and would have had deleterious effect on large investments in crucial sectors like power and steel... no coal block was offered for allocation after introduction of the Amendment Bill in Parliament," the release says.
"The allocation of coal blocks was never looked upon as a potential source for generating revenue for the central government. The intent of the government was to induce rapid development of infrastructure which was so very essential to keep the economy on a high growth trajectory. Hence the question of maximising revenue does not arise at all."
"The intent of the government was to involve the private sector to invest in identified infrastructure sectors in the interest of the country and its economy and, to this end; this developmental process was resorted to."
"The allocation of coal blocks to private sector companies is only for captive use and not for sale or commercial use of coal. Since the blocks are allocated to private companies only for captive purposes for the specified end-use, the question of linking the blocks to the market price/CIL price of coal does not arise at all," the PMO statement says.
"The coal blocks for captive end use were allotted on the basis of recommendations of a Screening Committee which followed a fair and transparent procedure giving equal opportunity to all applicants. The Screening Committee was a broad based body with representation from state governments at the level of the chief secretaries, concerned ministries of the central government and the coal companies," it adds.
"The process of allocation of blocks was equitable, fair and just which is borne out of the fact that there has never been any serious allegation against the working of the screening committee. The move to introduce competitive bidding is to make the selection process demonstrably more transparent," the PMO release concludes.
Source: India Today
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