No Coalgate if PM Manmohan Singh had stuck to his guns: Former Coal Secretary PC Parakh

Apr 15 2014, 16:20 IST
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PM okayed auctions, but PMO listed problems with the process. Reuters PM okayed auctions, but PMO listed problems with the process. Reuters
SummaryPM okayed auctions, but PMO listed problems with the process

PRIME Minister Manmohan Singh had approved the auction route for allocation of captive coal blocks in August 2004 and asked the then coal secretary PC Parakh to ready a Cabinet note for this, but later vacillated and let the junior coal minister sabotage the proposal, the former bureaucrat claims in his book Crusader or Conspirator? Coalgate and Other Truths, released on Monday.

Parakh’s account of policy-making between June 2004 and January 2006 (he retired in December 2005) suggests that Singh could not veto even lightweight ministerial colleagues like Shibu Soren and Dasari Narayana Rao and implement competitive bidding, that would have averted Coalgate. Or did he lack the courage of conviction to scrap discretionary

allocations, given the view of industry and colleagues that auctions would jack up costs?

Parakh argues auctions would not jack up costs — indeed, they would create more competition — and these were just ruses to delay transparent auctions.

Parakh’s revelations follow a controversial book by the PM’s former media aide Sanjaya Baru, where he said Singh often failed to exercise authority, doing the bidding of Congress president Sonia Gandhi.

Parakh was later named by the CBI for alleged irregularities in allocating coal blocks to Hindalco.

Explaining how Soren, Rao and the PMO torpedoed the attempt to replace the practice of allocating coal blocks by a screening committee with bidding, Parakh said: “It is clear from the sequence that neither the industry nor the political system wanted a transparent and objective procedure. Every possible effort was made to delay the introduction of open bidding until all the fully explored good blocks had been allocated.”

The coal ministry’s screening committee had allocated 57 blocks with combined reserves of 6.3 billion tonnes to private companies between 2004 and 2009. During most of this period, Singh held the portfolio.

Parakh’s contends the fear of auctions raising costs for users was unfounded as Coal India’s price would have served as a cap. After some wrangling with the then MoS Rao, Parekh got the auction proposal approved by Singh in August 2004. He claims that while the PM asked him to prepare a Cabinet note suggesting the bidding mechanism, he soon received a PMO note, enumerating the problems of such a system, which he believes, was based on an “unsigned note given by the minister of state (Rao) to the PMO.”

Rao, and subsequently Soren, who endorsed the former’s opinion, managed to stall the

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