Prime Minister opted out of coal block auction in 2005

Prime Minister Manmohan Singh approved a decision in July 2005 that the ministry of coal should continue to allot blocks for captive mining through the screening committee procedure until competitive bidding was made operational, documents available with HT show.

The minutes of a meeting chaired by TKA Nair, then principal secretary to the Prime Minister, revealed that Singh, who was coal minister then, went with the decision because he expected delays in implementing competitive bidding.

When asked for comments, the PMO cited an answer by the PM in Parliament: “It was noted that the Coal Mines (Nationalisation) Act, 1973 will need to be amended before the proposed competitive bidding procedure becomes operational. This is likely to take considerable time and the process of allotment of coal blocks for captive mining cannot be kept in abeyance for so long.”

Central government officials at the meeting were clearly in favour of competitive bidding as a selection method for allocation of coal and lignite blocks for captive mining. Jawed Usmani, then joint secretary (PMO) and now UP chief secretary, in fact, observed “rational bidding would ensure that the cost of coal through the competitive bidding route is less than that of coal sourced from Coal India Limited or imports”.

But state government representatives felt “there may not be any need for change if the screening committee procedure” was made more transparent.

Nair decided that the cabinet note proposing competitive bidding would be amended to take into account the concerns of state governments where the blocks were located.

The then coal secretary PC Parakh said: “Out of the 146 coal blocks available for allocations to approved end users, 86 have been allotted to various companies. With the passage of time, the number of coal blocks available for allocation is declining... application numbers are increasing... making the selection vulnerable to criticism on ground of lack of transparency... in this context the ministry of coal proposes to introduce competitive bidding.”