Existing developer should get first right of refusal: Parakh

PC Parakh, former Coal Secretary, had said it all in his book Crusader or Conspirator? Coalgate and Other Truths . Today, Parakh stands vindicated as his proposal for an open bidding mechanism is being widely endorsed.

“I feel satisfied with the verdict which is equitable and fair to everyone,” is Parakh’s first reaction after the Supreme Court decision on coal blocks allocation.

Parakh had earlier told

BusinessLine, “Had it not been for me proposing open bidding for coal blocks, the Government auditor would not have initiated work, and no one would have known how the blocks were allotted.”

Speaking to

BusinessLine from Chennai after the verdict, he said, “The Government will now have to take quick decisions to ensure smooth supplies.”

Fool-proof system

When asked whether six months was enough for the Government to put in place a fool-proof system for coal block auctions, Parakh said, “The Government has been saying that it is ready, but the task may not be easy.”

Parakh said that in his view, the developers who have already spent money on blocks and are producing, but today stand to lose following the verdict, should get the first right of refusal. “These operators should be allowed to participate in the open bidding and if their bid is better than the highest bidder then they should be considered,” Parakh said.

What has to be ensured is a minimum possible dislocation of supplies, he added. Asked what should be the production sharing regime adopted by the Government when going for open bidding, he said, “The Government will need to work on it carefully. Issues of profit share, royalty all need to be clarified.”

On whether the Centre should play a larger role in the contracts, Parakh said, “what I understand is that it will be the States who will be calling for the bids. This would mean that the contracts will be signed between the State and the developer.”