New Delhi:
The CBI's latest FIR into the allotment of the Talabira II coal block to Hindalco, a company of the Aditya Birla Group, has triggered a fresh crisis for the UPA government.
The FIR alleges that the government initially rejected Hindalco's bid for Talabira II, a block located in Odisha, allotting it instead to the public sector company Neyveli Lignite, but says decision was reversed after Kumara Mangalam Birla wrote to Prime Minister Manmohan Singh and subsequently met Coal Secretary PC Parakh.
The FIR directly names Mr Birla and Mr Parakh, but refers indirectly to the Prime Minister as the "competent authority" who ultimately cleared the reversal. The Prime Minister was also holding the coal portfolio at that time.
The CBI has not implied quid pro quo, instead registering an FIR under a weaker provision of the anti-corruption law, which states that even if through their actions a public servant unduly benefits either themselves or another party, it constitutes a penalty under section 13 (1) (d) the Prevention of Corruption Act.
The Birlas have denied any wrongdoing, saying that it is routine for their Chairman to meet top officials, and that hardly amounts to influencing policy.
Even so, the FIR has prompted calls from the BJP asking the Prime Minister to resign. The PMO on the other hand claims no wrongdoing, and that the rules were adhered to.
The reality may be more nuanced. A closer reading of facts suggest several loopholes in the defence provided by the Prime Minister's Office (PMO), but it's unclear whether it amounts to conspiracy, or a series of deviations from official policy.
For starters, the PMO's defence nowhere mentions a key reason cited by the multi-level government Screening Committee, headed by Mr Parakh, for rejecting Hindalco's application for Talabira II.
The Committee says Hindalco's application was rejected since it had already been granted a mine, Talabira I, for a project expansion which never took place.
Moreover, the Committee found that Hindalco was mining Talabira I and diverting the coal for an older project, which amounts to a potential violation of the terms of allotment.
When asked if Coal India, the government coal supplier, had brought this diversion to his notice, Mr Parakh admitted that they did but instead of taking action against Hindalco, he told Coal India that it was a good thing for them since they didn't have to supply coal to a private player at a time of acute shortage.
The PMO's defence says that the main reason for reversing the decision was because of a strong recommendation by the Odisha Chief Minister Naveen Patnaik in Hindalco's favour, an argument not backed by the facts.
A reading of the minutes of meetings of several Screening Committee's in that same period suggest that the recommendations of state governments have been routinely overturned. For instance, in a Screening Committee meeting in September 2006, the Madhya Pradesh government asked for the Brahmapuri coal block for a Madhya Pradesh-based company called Satna Power, but the Committee awarded it to a Chhattisgarh-based company called Pushp Steel. There are several such instances.
The PMO goes on to say that the reversal caused no loss to the Public Sector Units, since the Talabira II block was merged with another block, Talabira III and this combined entity shared between the PSU Mahanadi Coalfields (MCL), Neyveli Lignite, and Hindalco at a ratio of 70:15:15. The government admits that this brought down Neyveli's coal supply to less than 30 per cent, but that Neyveli was asked to form a joint venture with MCL which the government says would have met Neyveli's shortfall.
What the PMO neglects to mention is that even under the J/V, Neyveli would still have to buy the additional coal from MCL, while earlier it would have got it virtually for free.
Government spokespersons were unable to explain this anomaly.
Mr Parakh accepted that there is a financial loss to Neyveli, but said 'even if Neyveli had to pay little more money for taking coal from Mahanadi Coal, it had nothing wrong. I think it is a fair decision.'
When asked how he thinks it is fair to reduce the share of a PSU in a coal block by almost 70 per cent, he made a provocative contention. He said, "We must understand that entire captive coal mining policy was designed to bring the private sector into coal mining in the country and not meant for public sector companies because they have option of taking coal in any other area which is not reserved for captive mining."
In fact, he says that while Hindalco was eligible from the outset, he favoured Neyveli since it was a PSU, and that he had to virtually invent reasons for rejecting Hindalco's application. Later, when Mr Birla met him, Mr Parakh says he accepted his bias and reversed the decision.
Taken at face value, Mr Parakh's replies suggest the Talabira reversal might be the result of highly unconventional decisions by an independent-minded coal secretary who was willing to bend the government's own rules if he felt it came in the way of opening up the coal sector. His words carry weight because he is on record for having actively pushed for a more transparent bidding based process, which was repeatedly stymied by all stakeholders in coal allotment: the Central and State governments, and industry bodies. The CBI's contention that the reversal was a conspiracy to benefit a private individual will require more proof than the agency has currently declared.
But this doesn't mean that it's on a weak wicket with the other FIR's it has filed for wrongdoing in the coal allotment process. Most of these relate to 2006-2009, the period after Mr Parakh left office (he retired in December 2005). This was the time the government allotted a record number of coal blocks, even as it dithered over changing over to a bidding based system, a process that took 6 years since it was first proposed. The coal minister for much of this time was the Prime Minister.
Prashant Bhushan, one of the petitioners in the coal allocation case says that he doesn't doubt the Prime Minister's personal integrity but says that unless the CBI questions him, the answers to why the process of change took so long, and how these blocks were wrongfully cleared, will remain unanswered.