Ministry to CBI: coal block allocation just, fair

‘It would not have been prudent to disrupt pace of investments in coal sector’

Even as the Central Bureau of Investigation (CBI) sought information from power, steel and coal public sector units in its probe into the coal blocks scam, the Coal Ministry has maintained that the allocation of blocks was equitable, fair and just, which was borne out of the fact that there have never been serious allegations against working of the system.

Responding to the queries raised by the CBI and other agencies on allocation of coal blocks to private companies for captive use during 2004-09, the Coal Ministry has stated that even as the process of switching over from the Screening Committee procedure to competitive bidding was initiated, it was felt that the required legislative changes would be time-consuming. “The imperatives of the economic growth required massive capacity addition and this issue was deliberated at length in the meetings of the Energy Coordination Committee that had recommended allocation of coal blocks to prospective power producers. It would not have been prudent to disrupt the momentum of accelerated investments in coal sector, especially as it was felt that it would take time in bringing about required legislative and procedural changes,” the note states.

‘Harm averted’

Further, the Ministry said if the coal blocks were not made available between 2005 and 2010, it would have resulted in higher imports causing outflow of foreign exchange and would have had deleterious effect on large investments in crucial sectors such as power and steel. “It may be noted that the no coal block was offered for allocation after introduction of the Mines & Minerals (Development & Regulation) Act amendment bill in Parliament,” it added.

On revenue losses issue, the Ministry stated that allocation of coal blocks was never looked upon as a potential source for generating revenue. The intent of the government was to induce rapid development of infrastructure which was so very essential to keep the economy on a high growth trajectory. Hence the question of maximising revenue does not arise.

‘No commercial motive’

“The intent of the government was to involve the private sector to invest in identified infrastructure sectors in the interest of the country. The allocation of coal blocks to private sector companies is only for captive use and not for sale or commercial use. Since the blocks are allocated to private companies only for captive purposes for the specified end-use, the question of linking the blocks to the market price or Coal India limited price of coal does not arise at all,” it states.