'Allocation to pvt companies illegal' | delhi | Hindustan Times
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'Allocation to pvt companies illegal'

delhi Updated: Sep 13, 2012 02:06 IST
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The government may have violated existing laws for awarding coal mining contracts to firms that have little or no experience in power, steel or cement production - the only sectors for which private mining is currently permitted.

In the 2G spectrum allocation scam, real estate firms with no prior experience in telecommunication had gained licences to roll out mobile phone services.

A government-commissioned report, which was finalised in February 2012, hinted that laws may have been violated while granting coal blocks to firms without any experience in the approved sectors.

Legal experts told HT that the government's practice of indiscriminately allotting precious natural resources to firms lacking the required know-how could, in itself, be a violation of rules. http://www.hindustantimes.com/Images/Popup/2012/9/13_09_pg11a.jpg

"From what has come out in the public domain so far, the way coal blocks were allocated in a hush-hush manner gives rise to suspicions that there was an attempt to stifle any transparency in the process," former Chief Justice of India JS Verma said.

A report on Competitiveness in the coal sector, prepared for the corporate affairs ministry by the Institute of Corporate Affairs, states that "Section 3(3) of the Coal Mines (Nationalisation) Act 1973 Act prohibits any entity other than the central government, a government company, or a firm engaged in production of power, iron and steel, and cement from carrying out coal mining operations in any form".

In the case of India's coal industry, the legislation restricts entry and confers exclusive rights by statutorily limiting the production of coal to government companies, it said.

Legal experts cautioned that discretionary coal block allocation to companies without a proven background may open a legal minefield for the Centre.

"It should have been given to specialised organisations that consume it themselves, and do not indulge in trade and export of the natural resource. It is very clear that the procedure has not been followed," said Justice Santosh Hegde, former Karnataka Lokayukta.

"The government should have kept an eye on the concessional rates at which these were allocated and the price that these companies are charging for the final product - mostly power."