Was P C Parekh, the coal secretary of India during 2004-2005, a party to Rs. 1,85,591.34 crore coal block allotment scam – popularly referred as “Coalgate” – unearthed by the Comptroller an Auditor General (CAG)?
On Tuesday, October 15, the Central Bureau of Investigation (CBI) accused Parekh of indulging in corruption in granting Hindalco participatory interest in a coal block in Odisha, months before his exit from the coal ministry.
While it for the Court to decide on the future of the retired Andhra cadre IAS; the course of investigation may send shivers through the spines of a highly endangered tribe of upright bureaucrats, still left in the administration.
A careful read of the CAG report would find that Parekh put up a strong resistance against ad-hoc distribution of coal blocks by the Congress led UPA-I regime (2004-2009).
And, his endless communications – elaborating the loopholes in the captive dispensation policy and strong arguments in favour of competitive bidding – left all important trail of a crime in the making.
In early 2013, National Collateral Management Services Limited (NCML) published my essay “Coal Allocation Policy: A Critique” in the India Commodity Yearbook 2013 (http://www.ncmsl.com/CommodityYearBook.asp).
In readers’ interest, I reproduce the following section from the paper:
Babu proposes, politics opposes
Going by the chronology of events, one has no choice but to believe that the government was in hurry to prevent competitive bidding and let the blocks be allotted through the prevailing mechanism.
There were clear remarks from the minister of state for coal that the “proposal for competitive bidding may not be pursued”.
The minister cited “general reluctance on the part of power utilities to take part in competitive bidding due to cost implications and; “disagreed” to secretary’s view that screening committee could not ensure transparent decision making.
The debate continued for over one year, during which period Parekh was consistent that considering the huge interest and lobbying by industry for blocks, the prevailing ‘captive dispensation’ mechanism should open a Coalgate.
The chronology of events, as prepared by CAG, clarifies that PMO though well appraised by the coal secretary, preferred oppose competitive biding – citing either legal issues or opposition from the ruling politics in the coal bearing states.
With PMO backing captive dispensation, the screening committee started distribution of assets to private parties from March 2005. The second such allotment was made to Jayaswal Neco Ltd, in May 2005, followed by three blocks to Abhijeet group. Both are sponge iron makers and reportedly having strong influences over politics (of all class and creed).
Recent Media reports suggest that Jayaswal Neco and Abhijeet Group belong to the same family that managed a total of 10 blocks (“Coalgate[1]: One family that struck gold in coal Mines” Supriya Sharma, Times of India, Sep 5, 2012). And, there is little progress on the proposed end-use plants. The allocations are now probed by the investigating agencies.
What happened next is history! Parekh left coal ministry in end 2005. He was replaced by H C Gupta, as coal secretary. India started distributing coal assets in full steam from 2006.
According to CAG, coal ministry distributed 52 blocks between 2006 and 2008. The number and total reserves allotted far exceeds the total captive dispensation in between 1993 and 2005.
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