CBI questions coal allocations, says policy vague

According to the CBI, the coal block allocations were through the government dispensation route where the mining was to be performed by a government company or PSU for specified end use that could be captive or commercial. Shishir Gupta reports.

In a development that is bound to have political ramifications, the CBI has questioned the very basis of legal and policy framework involved in coal block allocations to government companies through joint ventures (JVs) and outsourcing to private players as majority stake holders.

The argument is the allocation process appears to contradict the Companies Act while the Coal Mines (Nationalisation) Amendment Bill, 2000, is still pending before Parliament.

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In a letter written to the Union government on June 5, CBI director Ranjit Sinha said despite the agency making persistent queries at different levels to understand the coal block allotment process, the coal ministry has not been forthcoming.

The CBI said even the detailed affidavit filed by the coal ministry before the Supreme Court had not provided any answers to the CBI on these fundamental queries required for proceeding with the preliminary enquiry registered on September 28, 2012. The coal ministry is yet to reply to Sinha’s letter.

According to the CBI, the coal block allocations were through the government dispensation route where the mining was to be performed by a government company or PSU for specified end use that could be captive or commercial. The other route was the captive dispensation route where allocations were made to a captive user on the recommendations of a screening committee to assess suitability.

The CBI has found that it was through the second route that the government allowed JVs with private players.

Attached to the letter is a seven-page note prepared by CBI DIG AS Dhillion that essentially criticises the legality and policy framework involved in allotment of coal blocks by the UPA government, including the time Prime Minister Manmohan Singh was in-charge of the coal ministry.

The CBI note raised pertinent questions on the basis of the files provided by the coal ministry for investigation into alleged irregularities of coal block allocation. For instance, under what policy was the private player in a JV with a government company, which was allocated coal block under the captive dispensation route, allowed to hike equity up to 74%, instead of the allowed 49%? Dhillion said the JV thus formed violated the Companies Act.

In addition, the CBI has questioned the government for permitting mining to private majority stake companies in JVs with PSU for block allotments under the captive dispensation route. The agency now wants to know from the UPA government how the ceiling of 74% was fixed for private players in a JV.