Here is the statement PMO has issued on the coal block allocation [in bold], and our comments:

1. There has been extensive media coverage recently of the matter relating to the allocation of Talabira-II and III coal blocks in Odisha to Mahanadi Coalfields Ltd, Neyveli Lignite Corporation and HINDALCO.

That there’s been extensive media coverage is an understatement. The matter has resulted in an FIR by the Central Bureau of Investigation against the ex coal secretary PC Parakh.

Parakh chaired the steering committee that did not award the mine to the Aditya Birla Group. He, instead, overturned his committee’s with approval of the “competent authority.”

It is instructive to remember that for intermittent periods Parakh wasn’t reporting to a full-time coal minister. In fact, Prime Minister Manmohan Singh had the coal portfolio intermittently.

2. Coal block allocations, including this one, are the subject of a CBI inquiry which is being monitored by the Supreme Court. However, the Talabira coal block allocation is a case where the final decision differed from the earlier recommendation of the Screening Committee, and 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.

The minute the FIR against him became public knowledge, Parakh hit the airwaves stating that he did nothing wrong by overturning the Screening Committee’s decision. In fact, he alluded that if at all he was guilty, his guilt was no more or no loess than Prime Minister’s.

However, as the hours progressed, and Parakh no doubt had more time to formulate his indignation, he clearly told Arnab Goswami of Times Now and Sudhir Chaudhary of Zee News that PM had in no way influenced his decision. Nor had PM/PMO/any minister instructed him to meet Kumaramangalam Birla.

With PM today stating that he had received a representation and he indeed had referred it to coal ministry (Parakh), it is evident that Parakh was just trying to re-enact Yudhishthira’s famous “Ashwatthama hatho,” in the Mahabharata. Perhaps, Arnab or Chaudhary weren’t specific enough to demand whether a written reference came from PM/PMO, but Parakh no doubt economized on the truth while confining himself to the version that PM/PMO did not ask him to see KM Birla.

3. The Prime Minister is satisfied that the final decision taken in this regard was entirely appropriate and is based on the merits of the case placed before him. The details of the processing at different stages of the decision making are summarized in the Annexure to clarify the position.

So, if PM is satisfied that Parakh’s decision was appropriate, and the CBI clear that Parakh merits an FIR against him; isn’t it clear where CBI stands against PM/PMO?

(The press statement does not have Para 4! So we’re unable to critique the silences.)

5. It is recognized that this allocation is subject to an ongoing investigation. No impediment is being placed on the CBI to continue the investigation and seek fresh information which may have a bearing on the case.

By issuing a detailed statement defending coal ministry’s decision (and stating PM/PMO’s own role in it) if this isn’t an impediment in CBI’s investigation, what it?

6. The investigation on this and other matters must take their normal course under the law.

Same as 1, 2, 3, 5 (and, obviously, no comment on the missing Para 4!)

Annexure

1. The Prime Minister received a letter dated 7.5.2005 from Shri Kumar Mangalam Birla requesting allocation of Talabira-II and III coal blocks in Odisha to HINDALCO for its 650 MW captive power plant in its Integrated Aluminium Project in Sambalpur District, Odisha and for a 100 MW captive plant for the expansion of its Hirakud Aluminium plant in Odisha. The letter was acknowledged by the Prime Minister who noted on the letter– “Please get a report from Coal Ministry”.

Lest this is confused with the tenure of the infamous Shibu Soren as coal minister, by this time (March 1, 2005 to be precise) Soren had moved out of this portfolio.

2. The Prime Minister’s Office forwarded the letter to the Ministry of Coal on 25.5.2005 requesting it to look into the matter and send a report.

This should be read as a Prime Ministerial reference to Parakh.

3. Shri Kumar Mangalam Birla submitted another letter to the Prime Minister on 17.6.2005 repeating the request. This letter was linked to the earlier reference and sent to the Ministry of Coal with a request to send their report on the matter.

Ditto to Pt 2.

4. In August 2005, Ministry of Coal sent its file on the matter to the Prime Minister. In the file, it was mentioned that  the Screening Committee had considered three major contenders for allocation of Talabira-II  and decided to allocate this block to Neyveli Lignite Corporation (NLC) as:

(i) adequate coal linkages had been provided to HINDALCO from Mahanadi Coalfields Ltd. (MCL) a long time back and HINDALCO had not used the coal,??(ii) Talabira-II & 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, (Talabira-III is a coal block which had been separately allocated to Mahanadi Coalfields Ltd.) and ??(iii) NLC & Mahanadi Coalfields Ltd. can develop the two blocks together as one large mine through a Joint Venture (JV).

Shri Kumar Mangalam Birla had requested for allocation of Talabira-II to HINDALCO as:??(i) HINDALCO was the first applicant for it as long back as 1996,??(ii) the  coal linkage granted earlier was not used as a bauxite mine lease relating to the aluminium plant had not materialized,??(iii) in view of the current shortage of coal, Mahanadi Coalfields Ltd. will not be able to supply coal as per the earlier linkage, and??(iv) the Government of Odisha favoured allocation of Talabira-II to HINDALCO in preference to NLC.

The Screening Committee chaired by Parakh had obviously played to the book – of favouring a PSU lest there’s a controversy. But in the process of being overruled, Parakh, in his subsequent reference to the competent authority had recorded enough reasons, including Odisha government’s backing, which justified over ruling of his own Screening Committee.

5. While the file was being processed in PMO, the Prime Minister received a letter dated 17.8.2005 from the Chief Minister of Odisha on the allotment of Talabira-II to HINDALCO. 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. The letter mentioned that aluminium plants should get higher priority over independent power plants as they generate more employment, create more wealth for the country and add to the growth of the manufacturing sector directly. Further, it stated that it is equitable to accord higher priority to units adding more value through manufacturing within the state where the coal mine is located. The letter urged that these special considerations be kept in mind and the matter examined expeditiously.? ?6. On 29.8.2005, the Ministry of Coal file on the matter was returned with the comment that while the file was being processed, a letter was received from Chief Minister, Odisha and the Ministry of Coal may please take this letter of CM, Odisha on record, re-examine the matter in light thereof and resubmit the file.

So, here’s CBI chief Ranjit Sinha’s next challenge. If Parakh is worthy of an FIR, and he resultantly has dragged PM/PMO in the cess pool; why’s Naveen Patnaik of Odisha to be spared? After all, Patnaik was the one who supposedly recommended Birla’s case repeatedly. And wasn’t he also the minister for mines between March 1998-2000 to know what he’s talking about!

7. Ministry of Coal resubmitted the file on 16.9.2005 with the proposal that

i) Talabira II & III be mined as a single mine with the mining done by a JV formed between MCL, NLC & HINDALCO.??ii)  The shareholding of the JV between MCL:NLC:HINDALCO to be 70:15:15. ??iii) Mahanadi Coalfields Ltd’s equity shareholding of 70% would approximately equal Talabira-III’s extractable reserves as a proportion of the total of the two blocks. Under the sharing arrangement, 70% of the total annual production will be handed over to Mahanadi Coalfields Ltd. ??iv) The remaining  30% of the annual production will be shared equally between HINDALCO and NLC with each getting 15%. ??v) The satisfaction level of NLC would be 29% of its total requirement and of HINDALCO, 81.5%.

Parakh obviously knew a lot about mining efficiency. Remember, he wasn’t just an IAS and a native of Odisha at that. He had trained in geology. [Also read Redux: what whistleblower PC Prakh had said about coal scam]

8.  The reasoning given by the Ministry of Coal was that:

i) Talabira-II & III combined have reserves of 553 million tonnes. ??ii) The total requirement of coal from these blocks from the three main contenders is 503 million tonnes,  with NLC seeking 280 million tonnes, HINDALCO seeking 100 million tonnes and Orissa Sponge Iron Ltd (OSIL) seeking 123 million tonnes.??iii)  Allocating the blocks to these three would leave little coal for Mahanadi Coalfields Ltd. ??iv) NLC may not be dropped as it is a Central PSU already recommended by the Screening Committee. HINDALCO’s case for allocation has been strongly recommended by the State Government and it has also been an early applicant. OSIL can be accommodated elsewhere.  ??v) It was further brought out that the Government of Odisha have indicated a clear preference for allotment of the block to HINDALCO in the interest of creating more employment and growth of the manufacturing sector in the state.??vi) It was also pointed out that while both HINDALCO and NLC get the same amount of coal, HINDALCO’s satisfaction level is about 80%, whereas NLC’s is much lower.. However, as NLC and Mahanadi Coalfields Ltd. are proposing to set up a JV power plant from the coal available from Talabira-II & III, NLC’s full requirements could be met from Mahanadi Coalfields Ltd’s reserves in Talabira-III. This would fully meet the coal requirement of the two CPSUs to set up their power project and protect the interests of the CPSUs.

Ditto as Pt.7 here.

9. While processing this proposal in PMO, it was noted that the ownership ratio in the JV ownership was not in congruence with the guidelines approved by PM on 09.06.2005 which required this ratio to be in proportion to the assessed requirement of coal of each allocatee. As per this guideline, the NLC:HINDALCO ratio in their 30% share should be 22.5:7.5 and not 15:15 as was proposed.

Ditto as Pt.7 here.

10. 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% share of production in the JV for Talabira-II & III combined to NLC & HINDALCO, with the remaining 70% of the total production taken by MCL has merit and may therefore be considered for acceptance.??iv) 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% 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.

Ditto as Point 7 here.

11. 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.

Wasn’t PM/PMO the coal minister/coal ministry?

12. The Prime Minister approved the proposal on 1.10.2005.

Ditto as Pt.11 here.