Coal ministry claims calculations are faulty and notional; Aviation ministry says the figure is totally erroneous and misleading; Power minister states the auditor ignored its submissions.
Lack of competitive bidding led to loss
The Comptroller and Auditor General (CAG) of India in its report on coal block allocations alleged that government’s failure to introduce competitive bidding process in the allocation had caused financial gains of Rs. 1.86 lakh crore to private coal block allottees.
The CAG report titled —Allocation of Coal Blocks and Augmentation of Coal Production — was tabled in Parliament on Friday. It said a part of this financial gain could have come to the government.
“The process of bringing in transparency and objectivity in the allocation process of coal blocks, which commenced from 28 June 2004 got delayed at various stages and the same is yet to materialise (as on February 2012) even after a lapse of seven years,” report said.
The auditor further rapped the government and said that a part of the lost finances could have accrued to the national exchequer by operationalising the decision taken years earlier to introduce competitive bidding for allocation of coal blocks.
The loss figure of Rs. 1.86 lakh crore was arrived at by the auditor in respect of 57 open cast or mixed coal mines allocated to private parties. The report names 25 companies that were beneficiaries and include the names such as Essar Power, Jindal Steel and Power, Hindalco, Tata Power, DB Power, Adani Power, CESC, Monnet Ispat, Rungta Mines, Mukund and Tata Steel.
Coal minister Sriprakash Jaiswal, however, dismissed the CAG’s reported loss of Rs. 1.86 lakh crore as “notional”.
“Of the 57 coal blocks that has been put under scanner only one coal block has become operational till date. Where is the question of undue financial gain to a private party. The entire loss figure is notional,” the minister clarified.
Jaiswal added the bidding process could not introduced because of opposition from three states that include Rajasthan, Chhattisgarh and West Bengal. Read the full report here.
R-Power misused surplus coal
Citing “undue benefits” of Rs. 29,033 crore to Anil Ambani controlled Reliance Power, the CAG on Friday came down heavily on the ministries of power and coal for favouring Reliance Power Ltd and vitiating the bidding process.
The CAG’s report on on “Ultra Mega Power Projects (UMPPs) under Special Purpose Vehicles” stated that Reliance Power was first given an extra coal block for its 4,000 MW Sasan UMPP and then allowed to divert surplus coal from this block to its other power projects.
“Permission for use of excess coal by Reliance Power from the three blocks — Moher and Moher-Amlohri extension and Chhatrasal — allocated for the Sasan UMPP after its award not only vitiated the bidding process but also resulted in undue benefit to RPL,” the report said.
Accordingly, the CAG has recommended that the allocation of third coal block should be appropriately reviewed.
In addition, the auditor also pulled up the government for giving almost double the land required for setting up an UMPP to Reliance Power and Tata Power.
The land agreed for the two UMPPs was in excess by 2,634 acres, the report said.
Power minister Veerappa Moily said the CAG ignored submissions made by his ministry while drafting audit report on UMPPs. Read the full report here
DIAL got prime land for pittance
Government handed over prime land to Delhi International Airport Ltd (DIAL) — the GMR-led consortium that runs the Delhi airport — for a pittance leading to a notional loss of over Rs. 1.63 lakh crore.
In a scathing audit report on “Implementation of Public Private Partnership Indira Gandhi International Airport,” the CAG has said that prime land that would fetch Rs. 1,63,557 crore to the private sector partner was leased out at an annual rent of Rs. 100 for 58 years. “The share of DIAL would amount to Rs. 88,337 crore, net present value of which is Rs. 4,187 crore,” the report said.
The auditor has pointed out that the government’s decision to allow levy of development fees was a “post-contractual benefit provided to DIAL” at the cost of passengers who were taxed for using Delhi airport amounting to Rs. 3,415.35 crore.
CAG has further said undue favour was granted to DIAL, which led to a loss of Rs. 239.69 crore during 2006-11 to the public exchequer, as funds were diverted from Passenger Service Fee escrow account for purchase of security equipment by the DIAL.
Aviation ministry said it strongly refuted the loss figures and other allegations made in the report.
Read the full report here.
News analysis: Reports provide ammo to Opposition, activists