Auction of coal blocks will hit industry, Oppn said in 2005

While the BJP disrupted the functioning of Parliament for the second consecutive day on Wednesday demanding Prime Minister Manmohan Singh's resignation for alleged failure to go for auctioning of coal blocks, at least four states that were ruled by the Opposition at the time had raised the red flag when the Centre proposed the competitive bidding route in 2005.

The Centre had cited the lack of "transparency and objectivity" in the existing system of allocation while proposing the auction route. However, BJP-ruled Chhattisgarh and Rajasthan, BJP-BJD-ruled Orissa and Left-ruled West Bengal had opposed the Centre's move in writing, raising a range of issues from federalism to adverse impact on iron/steel industrial undertakings and power projects.

In its report tabled in Parliament last week, CAG estimated a monumental loss to the exchequer because of the auction route not being followed on allocation of coal blocks.

The stand taken by the states:

RAJASTHAN

In a letter to the PM dated April 11, 2005, then chief minister Vasundhara Raje said that while there were no known deposits of coal in the state, the proposed change in allotment of lignite "would not be appropriate" due to the following reasons:

a) It was against the spirit of the Sarkaria Commission's recommendations;

b) It would take away the state's prerogative in selection of the lessee;

c) Lignite was proposed to be used in the state primarily for power generation. Allocation of lignite through competitive bidding followed by negotiation with the state government as regards purchase of power and other terms would put the state in a position of disadvantage;

d) The proposed process might result in lignite being mined by the successful bidder for use in locations outside the state.

CHHATTISGARH

In a letter dated March 28, 2005, to the secretary, Union Ministry of Coal, the Chhattisgarh chief secretary raised the following issues to oppose competitive bidding:

... contd.

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