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The Prime Minister, Dr. Manmohan Singh, on Monday rejected the Bharatiya Janata Party's demand for his resignation, saying allegations levelled against him in connection with the CAG report on coal block allocations were utterly baseless. Dr. Singh, who made a statement in the Lok Sabha amidst an uproar, challenged the findings of the CAG report. "The CAG report is critical of the allocations mainly on three counts. Firstly, it states that the Screening Committee did not follow a transparent and objective method while making recommendations for allocation of coal blocks. Secondly, it observes that competitive bidding could have been introduced in 2006 by amending the administrative instructions in vogue instead of going through a prolonged legal examination of the issue which delayed the decision making process," said Dr. Singh. " Finally, the report mentions that the delay in introduction of competitive bidding rendered the existing process beneficial to a large number of private companies. According to the assumptions and computations made by the CAG, there is a financial gain of about Rs. 1.86 lakh crore to private parties," he added. Asserting that the observations of the CAG are clearly disputable, Dr. Singh said : "The policy of allocation of coal blocks to private parties, which the CAG has criticised, was not a new policy introduced by the UPA. The policy has existed since 1993, and previous Governments also allocated coal blocks in precisely the manner that the CAG has now criticised." The Prime Minister said the UPA made improvements in the procedure in 2005 by inviting applications through open advertisements after providing details of the coal blocks on offer along with the guidelines and the conditions of allotment. "These applications were examined and evaluated by a broad based Steering Committee with representatives from state governments, related ministries of the central government and the coal companies. The applications were assessed on parameters such as the techno economic feasibility of the end use project, status of preparedness to set up the end use project, past track record in execution of projects, financial and technical capabilities of the applicant companies, recommendations of the state governments and the administrative ministry concerned," said Dr. Singh. "Any administrative allocation procedure involves some judgment, and in this case, the judgment was that of the many participants in the Screening Committee acting collectively. There were then no allegations of impropriety in the functioning of the Committee," he added. Dr. Singh further said the CAG says that 'competitive bidding could have been introduced in 2006 by amending the existing administrative instructions. This premise of the CAG is flawed'. "The observation of the CAG that the process of competitive bidding could have been introduced by amending the administrative instructions is based on the opinion expressed by the Department of Legal Affairs in July and August 2006. However, the CAG's observation is based on a selective reading of the opinions given by the Department of Legal Affairs," said Dr. Singh. "Initially, the Government had initiated a proposal to introduce competitive bidding by formulating appropriate rules. This matter was referred to the Department of Legal Affairs, which initially opined that amendment to the Coal Mines (Nationalisation) Act would be necessary for this purpose," he added. Dr. Singh further said a meeting was convened in the PMO on 25 July 2005, which was attended by representatives of coal and lignite bearing states. "In the meeting, the representatives of state governments were opposed to the proposed switch over to competitive bidding. It was further noted that the legislative changes that would be required for the proposed change would require considerable time and the process of allocation of coal blocks for captive mining could not be kept in abeyance for so long given the pressing demand for coal," said Dr. Singh. "Therefore, it was decided in this meeting to continue with the allocation of coal blocks through the extant Screening Committee procedure till the new competitive bidding procedure became operational. This was a collective decision of the centre and the state governments concerned," he added. The Prime Minister pointed out that it was only in August 2006 that the Department of Legal Affairs opined that competitive bidding could be introduced through administrative instructions. "However, the same Department also opined that legislative amendments would be required for placing the proposed process on a sound legal footing. In a meeting held in September 2006, Secretary, Department of Legal Affairs categorically opined that having regard to the nature and scope of the relevant legislation, it would be most appropriate to achieve the objective through amendment to the Mines & Minerals (Development & Regulation) Act," said Dr. Singh. "In any case, in a democracy, it is difficult to accept the notion that a decision of the Government to seek legislative amendment to implement a change in policy should come for adverse audit scrutiny. The issue was contentious and the proposed change to competitive bidding required consensus building among various stakeholders with divergent views, which is inherent in the legislative process," he added. Dr. Singh said major coal and lignite bearing states like West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan that were ruled by opposition parties, were strongly opposed to a switch over to the process of competitive bidding, as they felt that it would increase the cost of coal, adversely impact value addition and development of industries in their areas and would dilute their prerogative in the selection of lessees. "The then Chief Minister of Rajasthan Vasundhara Raje wrote to me in April 2005 opposing competitive bidding saying that it was against the spirit of the Sarkaria Commission recommendations. Dr. Raman Singh, Chief Minister of Chhattisgarh wrote to me in June 2005 seeking continuation of the extant policy and requesting that any changes in coal policy be made after arriving at a consensus between the Central Government and the States," said Dr. Singh. "The State Governments of West Bengal and Orissa also wrote formally opposing a change to the system of competitive bidding," he added. Dr. Singh said that the Ministry of Power, too, felt that auctioning of coal could lead to enhanced cost of producing energy. "It is pertinent to mention that the Coal Mines Nationalisation (Amendment) Bill, 2000 to facilitate commercial mining by private companies was pending in the Parliament for a long time owing to stiff opposition from the stakeholders," said Dr. Singh. "Despite the elaborate consultative process undertaken prior to introducing the amendment Bill in Parliament, the Standing Committee advised the Ministry of Coal to carry out another round of discussions with the States. This further demonstrates that the decision to seek broader consultation and consensus through a Parliamentary process was the right one," he added. Stating that the CAG report has criticised the Government for not implementing this decision speedily enough, Dr. Singh said : " In retrospect, I would readily agree that in a world where things can be done by fiat, we could have done it faster. But, given the complexities of the process of consensus building in our Parliamentary system, this is easier said than done." "Let me humbly submit that, even if we accept CAG's contention that benefits accrued to private companies, their computations can be questioned on a number of technical points. The CAG has computed financial gains to private parties as being the difference between the average sale price and the production cost of CIL of the estimated extractable reserves of the allocated coal blocks," he added. Lok Sabha Speaker Meira Kumar had asked the Prime Minister to table his statement in the Lok Sabha, but the opposition's uproar prevented him from completing his statement. The BJP has stuck to its demand for the Prime Minister's resignation over the CAG report on coal blocks allocation. The BJP has held the Prime Minister, who then held direct charge of the coal ministry when the allocations were made, responsible for what has been estimated as a notional loss of Rs 1.86 lakh crores by the CAG in coal block allocations, and demanded his resignation. The CAG report on coal block allocations states that nearly 150 coalfields were allotted to private and state-run firms without transparency and objectivity between 2005 and 2009.

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