“CBI trying to deflect investigations from real persons”

The registration of an FIR against the former Coal Secretary, P.C. Parakh, for alleged wrongdoing in allocation of captive coal mines is being seen as an attempt to deflect the investigation from the real persons involved in Coalgate and target those who sought to bring in transparency.

“This is nothing but an attempt to deflect the focus from the real persons involved and this can hardly be the case. The Comptroller and Auditor General (CAG) report does not laud Mr. Parakh as its reports do not imply or attribute any opinion or judgement. However, it was Mr. Parakh who pushed for the entire transparency drive in coal allocation after observing volatile prices and possibility of windfall gains,” a former senior CAG official, who wished not to be named, said.

Mr. Parakh has been named in the FIR along with Aditya Birla Group chairman Kumar Mangalam Birla.

“The Prime Minister took a decision regarding the pending amendments to the Coal Mines (Nationalisation) Act, 1973, thereby allocations continue through the same procedure. The Parakh-Aditya Birla nexus is baseless. Mr. Parakh’s integrity is undoubtedly supreme,” the former CAG official said.

In fact, it was The Hindu which on March 28, 2012, first reported that Mr. Parakh had brought to the notice of the government that flawed policies that allotted captive coal blocks rather than auction them, would give “windfall gains” to private parties.

In a comprehensive note on ‘Competitive Bidding for Allocation of Coal Blocks’ placed before the then Minister of State for Coal and Mines, Dasari Narayana Rao, on July 16, 2004, Mr. Parakh had pointed out that there was a “substantial difference” between the price of coal supplied by Coal India Limited and the cost of coal produced through captive mining. “There would be a windfall gain to the party who was allocated a captive block,” Mr. Parakh’s note had warned. The note was prepared after a stakeholders’ meeting the previous month had highlighted the concept of competitive bidding.

“Not transparent”

On July 28, 2004, the Minister of State sought clarifications on the proposal for allocation, regarding the likely opposition from the power sector, the impact of competitive bidding on price hike, and the government’s liability and obligations. By the end of that month, the Coal Secretary furnished the clarifications and repeated his warning that allocation was not transparent. “The present system of allocation in the changed scenario, even with modifications, would not be able to achieve the objectives of transparency and objectivity,” wrote Mr. Parakh on July 30.

Despite this, the entire file was then sent to the next level of Cabinet Minister. Interestingly, while Shibu Soren was the Cabinet Minister in-charge of Coal when the discussions on competitive bidding started within the Ministry, by July 24, he had been forced to resign due to an arrest warrant issued against him in the Chirudih massacre case.

Accordingly, the file landed on Prime Minister Manmohan Singh’s desk, since he took charge of the Ministry after Mr. Soren’s resignation. On August 20, Dr. Singh directed that a Cabinet note be drafted to consider and decide on the competitive bidding proposal. However, this was met with objections from the Prime Minister’s Office (PMO).

When he submitted the draft Cabinet note in September, the Coal Secretary said in his remarks that there was hardly any merit in the objections raised in the PMO’s note.

Mr. Parakh had also highlighted the different kinds of “pulls and pressure” experienced by the Screening Committee responsible for making allotment decisions.