U-turn on allocation of coal block to Hindalco points to PM

On November 10, 2005, the government eventually allocated Talabira II to MCL, NLC and Hindalco

Updated - November 16, 2021 11:22 pm IST

Published - October 17, 2013 11:44 pm IST - NEW DELHI

An activist holds a basket of coal during a protest against coal block allocation controversy, in New Delhi. File photo: Kamal Narang

An activist holds a basket of coal during a protest against coal block allocation controversy, in New Delhi. File photo: Kamal Narang

The former Coal Secretary, P. C. Parakh’s revelation on Wednesday that Hindalco was a competent candidate for a captive coal block and that he had “found merit in his (Kumar Mangalam Birla’s) case” is becoming increasingly contentious, with the minutes of the 25th screening committee meeting of January 10, 2005, which was chaired by Mr. Parakh himself, revealing an absolute rejection of Hindalco’s requirement of additional coal blocks. The minutes of the meeting are now available with The Hindu .

Hindalco had submitted a requirement for the Talabira II and Bijahan coal blocks for its proposed 200 MW captive power plant (CPP) expansion at its Hirakud facility and proposed Greenfield Aditya Aluminium Project with 720 MW CPP at Lapanga in Orissa that was to be set up in 2008.

However, since Hindalco was allocated the Talabira I block on February 25, 1994, the committee questioned why Hindalco was applying for a second block when it had failed to execute its promised end-use project over a period of 11 years, which was the expansion of its existing CPP from 67.5 MW to 267.5 MW for which it had secured its first coal block.

With respect to Aditya Aluminium’s greenfield project, “Chairman of the Screening Committee said that compared to other applicants who had set up their facilities, it was perhaps too early to ask for a block for a project, which is planned to be set up in 2010”.

The committee noted that despite the fact that Hindalco had coal linkage with Mahanadi Coal Fields Ltd. (MCL) and CPP expansion had not taken place, coal was being mined from Talabira I which was a clear violation of policy.

The committee felt that “M/s INDAL [a Birla company] was allocated Talabira I for their proposed 140 MW plant at Hirakud and 50 MW plant at Raigarh. However, they were mining coal from Talabira I and using it for their existing plant of 67.5 MW at Hirakud that was linked with MCL for coal supply. Now they were asking for Talabira II for a 200 MW expansion from 67.5 MW to 267.5 MW. Since Talabira I was given to them for 140 MW + 50 MW, they did not have a case for a fresh block for 200 MW capacity”.

Further, “As regards Aditya Aluminium [Hindalco], they had asked for supplies from Talabira II and Bijahan blocks for 650 MW coal-based CPP to be set up in Lapanga. The committee felt that coal could be supplied by NLC/MCL from Talabira II/Talabira III to this project after adjusting for the linked quantity to the project, if any.”

However, this option was quickly withdrawn in the same minutes as “(On subsequent enquiry, it is found that the Aditya Aluminium Project 720 MW CPP comprising 650 MW from coal was provided long-term linkage of 3.06 million tonnes per annum by MCL. This linkage will meet the full requirement of the 650 MW plant. No separate coal block, therefore, needs to be given for the Aditya Aluminium Project).”

However, despite this very clear rejection on January 10, 2005 of INDAL and Hindalco, which was approved on March 1 the same year at the 27th screening committee meeting, the government eventually allocated Talabira II to MCL, NLC and Hindalco on November 10, 2005.

This new evidence shows that the committee’s recommendations were changed in the case of the Aditya Birla Group at the behest of Prime Minister Manmohan Singh who was also Coal Minister at the time.

This conclusion is derived from the fact that though Mr. Parakh has taken part ownership for the change in the decision, the Coal Secretary alone, though heading the committee, has no power to change its recommendations. This power either vests with the committee or with the Coal Minister.

“Under the circumstances, the Coal Minister [PM] ought to have either abided by the recommendations of the committee, which rejected Hindalco’s application, or after receiving the company’s fresh representation to the PMO, referred the matter back to the committee,” says lawyer Sudiep Shrivastava, who has filed an application in the Supreme Court in the matter of coal sale permissions granted by the Union government.

Interestingly, the existing policy stipulates that no coal block in which any Central PSU has shown interest or has developed infrastructure in the area to support mining activity in the area will be allotted to any private company. Since in this particular matter, MCL, a Central PSU, had applied and was recommended for coal block allocation, it makes it doubly surprising that the Coal Minister (PM) went against the policy to approve and allot a share from Talabira II to Hindalco.

Neither the PMO, nor the Aditya Birla Group nor Mr. Parakh replied to a detailed set of questions mailed by The Hindu late on Wednesday night.

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