CAG opens fresh can of worms

Estimated loss in the allocation of 142 coal blocks since July 2004 brought down to Rs 1.86 lakh crore.

Published: 18th August 2012 10:08 AM  |   Last Updated: 18th August 2012 10:18 AM   |  A+A-


“Delay in the introduction of competitive bidding process has rendered the existing process beneficial to the private companies. Audit has estimated financial gains to the tune of Rs 1.86 lakh crore likely to accrue to private coal block allottees based on average cost of production and average sale price of open cast mines of Coal India Limited (CIL) in the year 2010-11.) A part of this financial gain could have accrued to the national exchequer by operationalising the decision taken years earlier to introduce competitive bidding for allocation of coal blocks. Therefore, audit is of strong opinion that there is need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on to the consumer.”

This is the clarity with which the apex auditor Comptroller and Auditor General (CAG)  slammed the government and its policies while it tabled its report on ‘Allocation of Coal Blocks and Augmentation of coal Production’ in Parliament on Thursday.

The CAG in its report names 25 companies including including Essar Group, Jindal Steel, Adani, ArcelorMittal and Hindalco, Tata Steel and Tata Power.

The CAG, however, brought down the estimated loss in the allocation of 142 coal blocks since July 2004 from Rs 10.7 lakh crore in the draft report to over `1.85 lakh crore being the benefit to private allottees.

“Delay in introduction of the process of competitive bidding has rendered the existing process beneficial to the private companies,” the CAG report said.

The CAG said it has arrived at the estimates based on the average cost of production and average sale price of opencast mines of CIL in the year 2010-11.

However, the government and the Coal Minister Sriprakash Jaiswal chose to reject the report stating that the “policy followed was transparent and not faulty.”

“We are not in agreement with the CAG calculation in its entirety. The policy adopted to allocate coal blocks was not faulty. There could not be a more transparent policy for allocation of coal blocks (since 2004 when no competitive bidding process was present),” an irate Jaiswal said while addressing the media here on Friday.

The CAG in its report further brought it to the notice of the government that “Captive coal mining is a mechanism envisaged to encourage private sector participation in coal mining. CIL has not been able to increase production to meet growing demand for coal for core infrastructure sectors like power, steel and cement etc. With the declared objective for “Power to all by 2012”, the government allocated 194 (net) coal blocks with aggregate geological reserves of 44,440 million tonne to government and private parties as on 31 March  2011. The procedure followed for allocation of coal blocks to captive consumers lacked transparency as the allotments of coal blocks to the prospective captive consumers were made merely on the basis of recommendation from State Governments and other administrative ministries without ensuring transparency and objectivity,” the CAG report said.

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