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Home News Power Sector News 'Coalgate': Power ministry, 3 states blocked auction route

'Coalgate': Power ministry, 3 states blocked auction route

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CAGState governments with coal reserves played a key role in the distribution of acreages without bidding and, as the Comptroller and Auditor General's draft report on allocation of 155 blocks notes, some of them expressed reservations over introduction of the competitive route. "The ministry of power and the governments of Chattisgarh , Rajasthan and West Bengal expressed their reservations on the implementation of competitive bidding for allocation of captive coal blocks," the report notes, pointing out that broadly all other central ministries and states supported the auction route. The blocks under review were allocated by an inter-ministerial Screening committee under the chairmanship of the coal secretary. The governments of states where blocks were being offered played a major role in the decision-making process. They were represented in the panel by a chief secretary-level officer.

"Audit observed that this system lacked transparency, objectivity and allowed windfall gains to the allocattees (sic)," the report notes. It also points how on September 25, 2004, the then coal secretary "highlighted different kinds of pulls and pressures experienced by the screening committee during the decision-making process... "

Till 2004, broadly this is how the process worked: An entrepreneur or private company identified a block and inked MoU with the government of the state where the acreage is located. The state issued a 'coal use' certificate and recommended to the coal ministry for allocation of the block.

Central government units approached the coal ministry through their parent ministries, while state governments recommended allocations to their own entities. The coal use certificates and the proposals were then scrutinized by the pertinent central ministry and put up before the screening panel. The state's representative sat on the panel with the chief minister's recommendation . The applicants made a presentation on the project to the committee which took a final call.

Since 2006, the coal ministry tweaked the system and advertised blocks on offer to seek EoIs (expressions of interest) from central and state utilities as well as private sector . But the CAG report notes that the coal secretary pointed out on July 30, 2004, that "the present system of allocation in the changed scenario , even with modifications, would not be able to achieve the objectives of transparency and objectivity in the allocation process" .

Source- Times of India


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