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PM admits he cleared coal block allocation to Kumar Birla’s Hindalco
Last Updated : 20 Oct 2013 12:54:32 PM IST
PM admits he cleared coal block allocation to Kumar Birla’s Hindalco
PM admits he cleared coal block allocation to Kumar Birla’s Hindalco


The Prime Minister's Office on Saturday ended its silence on the controversial allocation of coal block to Hindalco,saying Prime Minister Manmohan Singh had approved it on the basis of "merits" of the case placed before him.


The Prime  Minister's Office rejected any criminality in the most explosive development in Coalgate ie  in the allocation of the
coal block to a joint venture, including Kumar Mangalam Birla headed Hindalco, it rebutted the Central Bureau of Investigation's claim of illegality, saying the PM stood by the decision as no wrong had been committed.


The PMO said, "The PM is satisfied that the final decision in this regard was entirely appropriate and based on merits of the case placed before him."

  PMO made it clear , Singh was the 'competent authority' who cleared the proposal for Talabira coal block allotment mooted by the Coal Ministry in 2005.

 It acknowledged that the final decision of October 1,2005 "differed" from the earlier recommendation of the screening committee and released details of the sequence of events which suggested that the norms set by the Prime Minister were relaxed in view of representations made by Birla and Odisha Chief Minister Naveen Patnaik.

 "The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and based on the merits of the case placed before him," the PMO said in a statement here amidst a major uproar over the issue.

 While defending the decision, the PMO referred to Singh's statements earlier that the government has nothing to hide and it will fully cooperate with CBI which is probing the case.

 The allocation of Talabira coal block in Odisha is in the eye of a storm with CBI booking Aditya Birla Group Chairman Kumar Mangalam Birla and former Coal Secretary P C Parakh four days back.

 Parakh has said if he is accused of conspiracy, then the Prime Minister also should be made an accused as he had approved the revised decision, prompting the BJP to demand his resignation.


Acknowledging that the final decision was taken on an altered recommendation, the PMO said, "This was done following a representation received in the Prime Minister's Office from one of the parties, which was referred to the Ministry of Coal," an apparent reference to Birla's two letters.  The PMO said CBI is free to investigate the case as it may have got hold of some documents post-allocation.

"It is recognised that this allocation (of Talabira coal block) is subject to an ongoing investigation. No impediment
is being placed on CBI to continue the investigation and seek fresh information which may have a bearing on the case," the
PMO statement said.

 "The investigation on this and other matters must take their normal course under the law," it added in the statement issued in view of "extensive media coverage" on the matter. Giving the sequence of events, the PMO said Singh had received a letter dated May 7, 2005 from Kumar Mangalam Birla requesting allocation of Talabira-II and III coal blocks in Odisha to Hindalco for its 650MW captive power plant in its integrated aluminium project in Sambalpur and for a 100MW captive plant for the expansion of its Hirakud aluminium plant in Odisha.

 The Prime Minister noted on the letter -- 'please get a report from Coal Ministry', it said. The PMO forwarded the letter to the Coal Ministry on May 25, 2005 requesting it to look into the matter and send a report.

Birla submitted another letter to the Prime Minister on June 17, 2005 repeating the request. This letter was linked to the earlier reference and sent to the Coal Ministry with arequest to send their report on the matter, it said.

In August 2005, the Coal Ministry sent its file on the matter to the Prime Minister, mentioning that the Screening Committee had considered three major contenders for allocation of Talabira-II and decided to allocate this block to NLC.

The decision, in which Hindalco was not given the block,was based on three reasons, the PMO said.  One reason was that 'adequate coal linkages had been provided to Hindalco from Mahanadi Coalfields Ltd long time back and Hindalco had not used the coal'.

  Another reason given was that 'Talabira-II and III blocks needed to be developed together to extract an additional 30 million tonnes of coal which would have gone waste otherwise at the boundaries of each block'.

 The third reason was that NLC and Mahanadi Coalfields Ltd can develop the two blocks together as one large mine through a Joint Venture (JV). It noted that Birla had requested for allocation of Talabira-II to Hindalco reasoning that it was "the first applicant for it as long back as 1996" and that "the coal linkage granted earlier was not used as a bauxite mine lease relating to the aluminium plant had not materalised'.


Birla had also argued that "in view of the current shortage of coal, Mahanadi Coalfields Ltd will not be able to supply coal as per the earlier linkage and the government of Odisha favoured allocation of Talabira-II to Hindalco in preference to NLC."

 While the file was being processed in the PMO, the Prime Minister received a letter dated August 17, 2005 from the Chief Minister of Odisha Naveen Patnaik on the allotment of Talabira-II to Hindalco, the PMO said.

 "The CM's letter mentioned that the state government had assigned topmost priority to the allocation of Talabira-II to Hindalco and had strongly supported the case in the steering committee meeting," it said.

 "While recommending the case to the Prime Minister, it was clearly brought out that:

i) The state government of Odisha has strongly recommended allocation of Talabira-II to HINDALCO and supported it in the Screening Committee. Chief Minister,Odisha, had reiterated this position assigning topmost priority to the allocation of Talabira-II in favour of HINDALCO.

  ii) Under the MMDR Act, the mining lease for coal is granted by the state government with the previous approval of the central government.

  Thus, under the federal framework of sharing mining rights as provided under the Act, both the central and state governments need to concur before an allocatee can be granted a mining lease. Accordingly, the strong recommendation of the government
of Odisha is important and has to be given due consideration while taking a decision in the matter.

 iii) The Ministry's suggestion for allocation of 30 per cent share of production in the JV for Talabira-II & III combined to NLC & HINDALCO, with the remaining 70 per cent of the total production taken by MCL has merit and may therefore be considered for acceptance," the recommendation had said. "As for the NLC:HINDALCO equity ratio in the JV, this would require relaxation of guidelines that were approved by PM earlier but this could be considered as NLC and Mahanadi Coalfields Ltd. are sister PSUs and NLC?s requirements of coal could be met from Mahanadi Coalfields Ltd?s 70 per cent share of production. This would fully meet the coal requirement of the two CPSUs to set up their power project and protect the interests of the CPSUs," the recommendation had said.

"Based on these arguments and also on the reasoning of the Ministry, it was proposed that Prime Minister may approve:

 i) Allocation of Talabira-II & III to a JV owned jointly by MCL:NLC:HINDALCO in the ratio 70:15:15 with the other aspects as proposed by the Ministry.

 ii) The existing long-term coal linkage of HINDALCO may be reviewed and suitably reduced after taking into account HINDALCO?s requirement of coal for the project and the share of HINDALCO in the coal mined by the JV in Talabira-II & III,"
the PMO said citing the recommendation."The Prime Minister approved the proposal on October 1,2005," it added.

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