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One more Hindalco coal block under CBI scrutiny

The Ministry of Power has told the Central Bureau of Investigation that it did not recommend the 2006 allocation of Mahan coal block in Madhya Pradesh to Aditya Birla group company Hindalco. The letter from the ministry dated December 27, 2013, a copy of which is with The Indian Express, is a response to the preliminary enquiry filed by the CBI.

After the Talabira II allocation — in which an FIR has been filed — the Mahan block is the second coal block awarded to the Kumar Mangalam Birla group, in a joint venture with Essar, that's now being probed by the CBI. As of today, mining hasn't started in the block as it is yet to get forest clearance.

The Power Ministry had recommended to the Ministry of Coal the allocation of Mahan coal block to Essar Power.

According to rules of the inter-ministerial screening committee — which took the final call on allocations — coal blocks were to be given to companies only on the basis of recommendations made by the state government concerned or the end-user departments, in this case the Power Ministry.

Under CBI scrutiny is the sequence of events that led to the allocation to Hindalco. Records accessed by The Indian Express show that Hindalco got the Mahan block despite its 2004 application being rejected by the power ministry and twice by the Madhya Pradesh government as well.

Consider the following:

August 2004: Hindalco's application was rejected by the Power Ministry

November 2004: Coal Ministry invited Hindalco to ask for Mahan

December 2004: Hindalco applied again for the block but Madhya Pradesh government rejected it  

March 1, 2005: Hindalco and Essar made a presentation to the screening committee

March 16, 2005: Then Coal Secretary PC Parakh wrote to Madhya Pradesh chief secretary Vijay Singh to reconsider the state position and support Hindalco

March 23, 2005: Singh wrote back saying a state level committee had rejected Hindalco and favoured Essar

June 2005: A meeting of the screening committee supported Hindalco and Essar as joint venture partners

In September 2005, both companies were called to the coal ministry and told to work the mines together and on April 12, 2006, the block was allocated to a joint venture between the two with a shareholding of 60:40 for Essar and Hindalco.  

When contacted by The Indian Express, Hindalco's spokesperson said, in a statement, that the allocation of Mahan "was done in the most transparent manner and following all the requisite regulatory processes." When asked about the rejection by the Power Ministry, she declined to comment. On the Madhya Pradesh government's decision to reject, she said: ""We cannot comment on the Madhya Pradesh government's decision as we are not privy to all facts."

When contacted, Parakh said he could not recall details about the allocation as it happened a long time ago. "Normally recommendations from state governments and end user ministries were considered. In any case, the state government representatives were present in the meeting".  

Parakh, incidentally, was named by the CBI along with Kumar Mangalam Birla in October last year for alleged "criminal conspiracy" in the allocation of Talabira II coal block in Orissa. He has strongly denied those charges saying the recommendations were backed by the PMO.

Source: The Indian Express