ET reported that Prime Minister Dr Manmohan Singh's sharp retort to the audit report on allocation of coal blocks has showed the aggressive stance of the ruling party on the issue, but it has also questioned the findings of the government's own panel set up after Ms Sonia Gandhi's clarion call to take corruption head on at a Congress plenary session in December 2010.
Dr Singh found the Comptroller Auditor General's observations disputable and to be based on selective reading of available material. The CAG had observed that the government was sloppy and non transparent in implementing its own policy on coal blocks.
Ironically, similar points were raised by the Ashok Chawla Committee on allocation of natural resources. It had concluded that the majority of coal in India is still allocated through a relatively non transparent system via the screening committee route, an observation echoed in the controversial audit report.
The government had also justified the allocation of coal blocks saying private initiative in the sector was needed because Coal India was unable to boost output adequately. CAG sources have said that this argument was defeated by the fact that hardly any coal was produced from the blocks given to private firms.
Here again, the government is on the wrong side of the Chawla panel, which had observed that the private sector seems to be unable to move any faster than the public sector, in the report .
The report has not been put in public domain although sections of it have been reported. In May 2012, the PM asked various ministries to implement the 69 agreed recommendations out of the 81 proposed. Half of the remaining 12 rejected suggestions were about allocation of coal.
Last week, as part of its Presidential reference to the Supreme Court on whether all natural resources must be auctioned like telecom spectrum, the government said it hadn't actually accepted the recommendations but asked ministries to pursue them in a timely manner.
In his statement to Parliament, the PM admitted that the coal produced from captive blocks allotted to the private sector between 2004 and 2010 was below the target. He said that "It is reasonable to expect that as clearances are speeded up, production will come into effect in the course of the Twelfth Plan."
However, the Chawla Committee was not as optimistic, pointing to the fact that just 15% of captive mines allotted till date are operational and even those are producing just 4% of their possible peak coal output.
The committee said that "Only three mines allocated as captive blocks since 2003 have started production. Many blocks awarded even as early as 2003 and 2004 have not yet completed their land acquisition, even where Stage I forest clearance has been granted. Only a limited number of blocks are in a position to come into production in the near future."
The committee also expressed concerns about blocks awarded jointly to different companies. As of February 2011, not a single such block had commenced production. Where a captive coal block's capacity is greater than the required use of any single end use project, the government had been awarding blocks jointly to multiple firms who are expected to split the development costs.
In the government's defense on the CAG observations, the PM had said that the screening committee in charge of allocating captive coal blocks evaluated applications on parameters such as techno economic feasibility of the end use project, past track record in execution of projects and so on.
As per existing practice, captive mines are granted to private players through screening committees headed by the coal secretary that include representatives from state governments and ministries. Firms are invited to make presentations regarding their applications.
Dr Singh said that "Any administrative allocation process involves some judgment and in this case the judgment was that of the many participants in the screening committee acting collectively."
But the Chawla panel doesn't agree. It said that "There is a list of technical and economic criteria, which the committee is supposed to use to assess projects. However, the criteria are so broad that any decision can be justified."
Source - Economic Times
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