M A I N   N E W S

PMO deferred coal auction policy: CAG
Aditi Tandon/TNS

New Delhi, August 18
Three reports of the Comptroller and Auditor General (CAG) estimate that private players gained a whopping Rs 3.82 lakh crore due to faulty government policies in captive coal mining, use of coal by private power generating firms and development of Indira Gandhi International Airport in public private partnership.

Of this, the bulk gain of Rs 1.86 lakh crore was to private companies allotted captive coal mining blocks on plain nomination by a government committee instead of auction.

Another Rs 1.67 lakh crore benefit went to Delhi International Airport Limited (DIAL), government’s joint venture with Hyderabad-based GMR that was tasked with the expansion of New Delhi’s Indira Gandhi International Airport. The remaining Rs 29,000 crore gain went to Reliance Power whom the government allowed to divert surplus coal from captive mines of one power project to another plant against rules.

Of the largesse, Rs 1.86 lakh crore extended to private coal block- seeking firms remains the most sensational, as it surpasses the 2G Spectrum notional loss figure of Rs 1.76 lakh crore and indirectly hits out at PM Manmohan Singh, who held the Coal portfolio for most part of the CAG audit period 2004 onwards.

The auditor stumbled upon the scam during its assessment of the captive coal block allocation policy by the government under which, a government-established screening committee under the Coal Secretary would advertise coal blocks, invite state and private parties and recommend them for allocations.

The CAG slammed the process as non-transparent as in several test checked cases, the committee (comprising state chief secretaries and end user Ministry officials) was found to be recommending allocations without proper basis. For Rampia coal block, it got 108 applications but invited two parties for presentations before finally recommending six.

The auditor report says the concept of auction (competitive bidding) was introduced by the government in June 2004 and the Coal Secretary endorsed it, but the PMO deferred it.

“Competitive bidding was discussed in the PMO. It was felt that since many applications for blocks based on the current policy were pending, it won’t be appropriate to change the policy. Accordingly, competitive bidding policy could be made prospective and cut-off date for considering applications as per the current policy and proposed revised policy was taken as June 28, 2004,” the then Coal Secretary said on October 15, 2004.

Despite a cutoff, auction rules were notified this February after the Parliament amended the Mines and Minerals Regulation Act to auction mining of minerals, including coal.

The CAG states that pending this amendment, captive blocks were allocated through the non-transparent screening committee policy “on the advice of the Energy Coordination Committee headed by the PM”. This after the Law Ministry said to the Coal Ministry in July 2006 that it could amend its administrative instructions to introduce auction.

The auditor said the Coal Ministry unnecessarily delayed the matter by referring it back and forth to the Law Ministry, which finally sought amendment to the law for a legal footing to auctions. The delay in competitive bidding, it said, benefitted 25 private players which got 57 blocks since 2004.

Between 1993 and June 2004, 39 blocks were allocated. Since 2004, 142 blocks with a geological reserve of 36,927 million tonne were allocated through a non-transparent policy, 75 to private parties.

The whopping figure of Rs 1.86 lakh crore

  • Govt said private firms bore an extra Rs 150 per tone financing cost over and above CIL's extraction costs
  • CAG deducted this from Rs 1028.42, average sale price per ton for all grades of CIL coal (2010-11).
  • From sale price of `878.42 per tone for private players, CAG deducted Rs 583.01 average cost of production per ton to get the figure of Rs 295.41 per ton (benefit).
  • CAG multiplied this with 6282.5 million tones, the extractable reserve of open cast mines of 57 allottees. That came to Rs 1.86 lakh cr





HOME PAGE | Punjab | Haryana | Jammu & Kashmir | Himachal Pradesh | Regional Briefs | Nation | Opinions |
| Business | Sports | World | Letters | Chandigarh | Ludhiana | Delhi |
| Calendar | Weather | Archive | Subscribe | E-mail |