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CAG reports on coal, aviation, power sector give anxious moments to govt, big corporate houses

The government rubbishes the CAG's findings that private firms had got "undue benefits" in coal, aviation and power sectors, arguing that the calculations were "misleading" and faulty and accused the auditor of not following its mandate.

BT Online Bureau | August 18, 2012 | Updated 13:00 IST

The Comptroller and Auditor General (CAG) presented three reports in Parliament on Friday that gave both big corporate houses and government anxious moments.

Corporate houses such as Essar Power, Hindalco, Tata Steel, Tata Power, Reliance Power and Jindal Steel and Power have been allegedly named in the report who got government's favour that according to CAG caused estimated loss of Rs 3.8 lakh crore.

The CAG said the Anil Ambani-led firm, Reliance Power, got undue benefit of Rs 29,033 crore when the government allowed use of surplus coal from blocks allotted to Sasan power plant for its other projects.

The government, however, has rubbished the CAG's findings that private firms had got "undue benefits" in coal, aviation and power sectors, arguing that the calculations were "misleading" and faulty and accused the auditor of not following its mandate.

Defending the coal allocations between 2005 and 2009 without competitive bidding, Coal Minister Sriprakash Jaiswal said that the method adopted was "transparent".

Addressing a press conference after placing of the CAG report in Parliament on Friday, Jaiswal said the auction route was not chosen as there were conflicting opinions from the Law Ministry in 2006.

Besides, there was strong opposition from Chhattisgarh, Rajasthan and West Bengal, then ruled by the BJP and the Left, against competitive bidding, he said. These states had said this would result in increase in coal and power prices.

"The three governments said the existing system of allocation should not get changed at any cost... In the federal structure, we have to respect the opinions of state governments," the Coal Minister said.

He said the allocation process "was totally transparent, policy was entirely correct... If there is any irregularity, that is being investigated by the CBI".

About the estimated Rs 1.86 lakh crore likely gain to be made by the private parties, he said "This is notional. I am not here to challenge any authority. Their (CAG's) work is to conduct audit, government's work is to make policies and take decisions while taking care of people of the country."

The CAG report said that part of the money, from the 57 blocks allocated to the private sector, could have accrued to the national exchequer had the procedure of competitive bidding was put in place earlier.

"We are not in agreement with the CAG calculation in its entirety... When blocks are not operative,it is not a right idea to do calculation; it is faulty", he said.

Soon after the the CAG's reports on coal allocations, Delhi International Airport Limited (DIAL) and power were tabled in Parliament, respective ministries came out with their counter points on the observations of the government auditor.

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Civil Aviation Ministry also refuted the loss figures given out by CAG in its report on Delhi airport, saying the calculation was "totally erroneous and misleading".

It claimed its views were not incorporated in the report which estimated a potential earning capacity of Rs 1,63,557 crore to DIAL when it was given Delhi airport land on a concessional lease, of which GMR-led private consortium will get Rs 88,337 crore.

A Ministry statement said that in the calculation, the CAG "simply adds the nominal value of the projected revenue, without taking the net present value.

Minister of State for Personnel V Narayanasamy claimed that the CAG reports were not final.

"I am not going to say anything on the merit of this.

Because unfortunately CAG has got a mandate under the Constitution. According to me, the CAG is not following its mandate, which I feel, I wish to bring to notice," he said.

With inputs from PTI

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