CAG report hints at discrepancies in coal mine auctions

The Comptroller and Auditor General of India (CAG) has pointed out that many qualified bidders in the e-auction of coal mines in 2015 were from the same company - parent/subsidiary, coalition or joint ventures - due to which the auctions may not have achieved the "potential level of competition".

In its audit report tabled in Parliament today, the CAG observed that such bidding by similar firms was seen in 11 out of 29 coal mines successfully e-auctioned in the first and second tranche. In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation.

It further noted that 15 of the mines auctioned last year have not started operation even after passage of more than 12 months, defeating the purpose of early auctioning.

The CAG report also pointed out other discrepancies in the e-auction. It observed in its report that no mechanism existed at the level of Ministry of Coal or Coal Controller's Organisation (CCO) to "cross check the production figures provided by the prior allottee". There was a mismatch in eight cases between the production quantity submitted by prior allottees to state governments for royalty vis--vis submitted to CCO for payment of additional levy.

According to CAG, there were inconsistencies and inaccuracies in following some of the assumptions and there were various errors in computation of intrinsic values, which cumulatively resulted in under determination of upfront amounts, floor prices and revised fixed rates of the coal mines.