Open to scrapping 'coalgate' allocations, says govt

  • Bhadra Sinha, Hindustan Times, New Delhi
  • Updated: Jan 09, 2014 11:01 IST

The government could reconsider the 32 cases of coal block allocations made to private companies after 2005 and consider scrapping them, attorney general GE Vahanvati told the Supreme Court on Wednesday.

Appearing before a three judge bench headed by Justice RM Lodha, Vahanvati said: “I am personally of the view where no rights have been created and investments haven’t been made, we can have a relook at them. Allocations made post 2005 by the five screening committees (32,33,34,35 and 36) haven’t got off ground.” He will inform the court about the government’s decision on Thursday.

The Supreme Court is hearing a bunch of PILs challenging coal block allocations made during the UPA regime and is also monitoring a CBI probe into the alleged scam.

This is the first time the UPA government has cleared its stand on coal block allocations made between 2005 and 2009.

The Centre had chosen not to auction these blocks despite having the legal authority to do so. Instead, it allocated the blocks through screening committees, which, according to a CAG report, resulted in a windfall gain of R1.86 lakh crore to the allottee companies.

With regard to the allocations made prior to 2005, the AG contended that de-allocations would lead to multiple litigations. Of the 46 allocations made between 1993 and 2005, only 17 companies had got mining leases while 29 were awaiting clearances.

However, he added, companies had made substantial investments and were awaiting clearances. Therefore, it would improper to cancel them now, he said.

“Huge investment made by companies in coal blocks without getting clearances cannot be a ground for not cancelling licenses. They have done so at their own risk. How could they invest without getting a license?” the bench observed.

It wasn’t immediately clear how this would affect investor sentiment. Reacting to this observation, Kameswara Rao, leader, energy, utilities and mining, PwC, said: “In the resources industry, significant upfront investments are necessary… However, companies cannot be faulted for following prescribed procedures… or for delays in securing consents, which is outside their control.”

“The parties to whom coal blocks have been allocated can only initiate action for getting clearances. Fault will lie with the allottees only if they have not taken action to get clearances from the government,” added Chandrajit Banerjee, director general, CII.

Meanwhile, in an embarrassment to the Centre, Maharashtra and Andhra Pradesh, two Congress-ruled states, submitted before the top court that coal blocks allocation was “entirely controlled and regulated” by the Union of India and the state government was just a subordinate party.

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