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PM Rejects Oppn Claims; Says Report Flawed

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Prime Minister Manmohan Singh rejected accusations of wrongdoing against him in coal block allocations on 27 August, attacking CAG's computation of loss of Rs 1.86 lakh crore in coal block allocation as "flawed" and "misleading". Singh took the battle to the Opposition camp, blaming it for thwarting the Centre's efforts to shift to competitive bidding.
 
The Prime Minister also said the government has already initiated the process of cancelling mines to companies which failed to develop them and action would be taken against "wrongdoers" if any. (Read: Cancellation Starts)

Making a statement in both Houses of Parliament amid uproar created by BJP members, Singh refused to be on the back foot, declaring that he takes "full responsibility" for the decisions taken as he contended that CAG's "observations" are "clearly disputable".
 
With BJP creating disruptions, he read out a few portions of his four-page statement before laying it in Lok Sabha and Rajya Sabha which were repeatedly adjourned because of uproar.
 
"I am sorry that the House is not allowed to function and the BJP is determined to disrupt the proceedings of Parliament. I wish to assure the country that we have a very strong and credible case," he told reporters outside Parliament House after the opposition disrupted his speech in Lok Sabha.
 
"Once again I appeal to the opposition to come back to the House to debate on these issues and let the country judge where the truth lies," Singh said.
 
Conscious that the CAG reports are normally discussed in detail in the Public Accounts Committee of Parliament where the ministry concerned responds, Singh said he was departing from this established procedure "because of the nature of the allegations that are being made and because I was holding the charge of coal minister for a part of the time covered by the report."
 
Responding point-by-point to the CAG's observations, the Prime Minister said even if the government auditor's contention that benefits accrued to private companies were accepted, "their computations can be questioned on a number of technical points."
 
He asserted that aggregating the "purported gains" to private parties "merely on the basis of the average production costs and sale price of CIL (Coal India Limited) could be highly misleading."
 
As coal blocks were allocated to private companies only for captive purposes for specified end-uses, he said, it would not be appropriate to link the allocated blocks to the price of coal set by CIL.
 
The Prime Minister, whose resignation is being sought by the BJP, asserted that "any allegation of impropriety is without any basis and unsupported by facts".
 
Seeking to corner the Opposition over the issue, he said the policy of allocating coal blocks without competitive bidding existed since 1993 and previous governments also allocated "precisely in the manner that the CAG has criticised".
 
He also said major coal and ignite bearing states like West Bengal, Chhattisgarh, Jharkhand, Orissa and Rajasthan "ruled by Opposition parties" were "strongly opposed" to a switch over to competitive bidding process.
 
On the charge of delay in bringing the Coal Mines Nationalisation (Amendment) Bill, 2000 to facilitate commercial mining by private companies, Singh said it was pending in Parliament for a long time owing to "stiff opposition from the stakeholders" and government wanted broader consultations and consensus.
 
Singh said these state governments felt that a switch over would increase the cost of coal, adversely impact value addition and development of industries in their areas and dilute their prerogative in the selection of leases.
 
Citing instances, he said the then BJP Chief Minister of Rajasthan Vasundhara Raje had written to him in April 2005 opposing competitive bidding.
 
The Prime Minister quoted Raje as saying then that the competitive bidding was against the spirit of the Sarkaria Commission recommendations.
 
Singh also named another BJP Chief Minister Raman Singh (Chhattisgarh) saying that the latter had written to him in June 2005 seeking continuation of the extant policy of coal block allocation.
 
He said the Chhattisgarh Chief Minister had requested that any change in coal policy be made after arriving at a consensus between the central government and the states.
 
"The state governments of West Bengal (Left) and Orissa (BJD-led) also wrote formally opposing a change to the system of competitive bidding," Singh said
 
Last week, the government had said that when it had suggested allocating mines through an auction, a series of states, some of them governed by the BJP, had objected, arguing that this would push coal prices up and adversely impact industrial development in their states. "Rajasthan, Chattisgarh, Jharkhand, Odisha, West Bengal... they all aggressively resisted a bidding process," said coal minister Sri Prakash Jaiswal.
 
If coal is auctioned to get the maximum market price from power producers, then power producers will be able to recoup their cost from the consumers by hiking the prices steeply. Now question arises will the electricity regulatory authorities allow power producers to hike tariffs if the cost of fuel is high?