India panel urges scrapping of coal mine allocations

NEW DELHI (AFP) - An Indian parliamentary panel on Tuesday urged the scrapping of "illegal" allocations of coal mines between 1993 to 2010 to private firms, creating fresh uncertainty in the key energy sector.

The panel's report added fuel to an ongoing row, dubbed "Coalgate" by the media, over allocation without competitive bidding of coal resources on which Asia's third-largest economy relies to meet over half of its vast energy needs.

The conclusions of the Standing Committee on Coal and Steel, a permanent legislative panel, triggered uproar in parliament as well as opposition calls for the resignation of Prime Minister Manmohan Singh.

Mr Singh, 80, in addition to his job as prime minister of the left-leaning Congress-government, served as coal minister from 2004-2009.

The committee, in its report tabled in parliament, said the coal blocks awarded between 1993 and 2010 were distributed in a "most non-transparent" manner to a "few fortunates" through "abuse of power".

"All blocks allotted to private companies, at least where coal production has not started, should be cancelled immediately," the committee added, urging "penal steps" be taken against those involved in the allocations.

The period examined by the panel spanned the rule of the opposition Bharatiya Janata Party and the current Congress-led government, which has been rocked by controversies throughout its second term.

The "illegal" allocations caused huge losses to the state's exchequer, the committee said, although it was unable to estimate the exact sum lost as the coal ministry could give no information about the value of the mines awarded.

The panel's findings echoed those of the national auditor last year who said the Congress government gave away some US$33 billion (S$41 billion) in windfall benefits to firms to extract coal.

The row paralysed parliament for days amid charges of "crony capitalism" and allegations by the media some of the companies which won coal blocks had falsified their abilities to mine coal or had political ties.

In 1973, India nationalised its coal industry and created state-run giant Coal India. Then in 1993 it allowed private companies to mine coal for their own use when state output could not supply demand.

But "out of 195 coal blocks allocated so far for captive mining, 30 blocks have started coal production and out of 160 captive coal blocks allocated during 2004 to 2008, only two have started production", the panel said.