KOLKATA (miningweekly.com) - Fears over political fallouts and ongoing investigations into illegalities in past coal block allocations have cast a pall of uncertainty over the industry, with the Indian government deciding not to proceed with the auction of new blocks for user industries.

According to officials in India’s Coal Ministry, the allocation of coal blocks allocated through a screening committee had triggered a political furore over corruption and illegalities. The government has now decided to delay the allocation of new coal blocks until criminal investigations into the allocation process were completed.

The officials said that the country’s apex investigative agency, the Criminal Bureau of Investigations (CBI), was currently probing the earlier allocations of coal blocks under the supervision of the Supreme Court. The Coal Ministry favoured the completion of the investigations by the CBI before putting new coal assets on the block.

The Ministry would not hurry through new allocations or the process of competitive bidding, before making the process foolproof and insulating it against any new allegations. The officials argued that considering the auction of coal assets would be a first in the country, potential causes for accusations of complicity between any of the stakeholders would have to be eliminated.

Citing an example, it was pointed out that even under the auction guidelines being considered, possibilities of cartels between prospective bidders could not be ruled out and such risks were unacceptable against the backdrop of current controversies.

Privately, the officials conceded that with Indian national elections scheduled next year and with charges of corruption in the handling of previous allocations already a potent tool in hands of opposition political parties, the incumbent government could not risk any new controversy and, hence, auctions were unlikely to be held any time soon.

The Ministry’s cold feet in following through the proposed coal block auction follows the CBI filing charges against Jindal Steel and Power Limited (JSPL) chairperson Navin Jindal and former Junior Coal Minister D N Rao for involvement in kickbacks in the allocation of coal blocks to JSPL. Both Jindal and Rao belonged to Congress party which leads the current coalition federal government of India.

Earlier, the Coal Ministry had missed the March 31 deadline for allocating 17 coal blocks through the first ever auction of coal assets, on the grounds of delays in fixing a reserve price for bids.

In a status report filed by CBI before the Supreme Court, the investigative agency stated that coal block allocation by government between 2006 and 2009 based on applications made to a screening committee was "done without verifying credentials of companies which misrepresented facts about themselves".

The agency was currently probing charges of corruption and irregularities in the allocation of 192 coal blocks between 1992 and 2011 and had filed three preliminary reports relating to allocations between 2006 and 2009, 1993 and 2004, and to joint ventures.

CBI had filed 12 first information reports relating to allocations between 2006 and 2009, the latest one being against Jindal and Rao.