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No auction of coal mines cost Rs 1.86 lakh cr to exchequer: CAG

Pointing towards lack of transparency, the CAG report says the coal blocks were allocated to the private companies on nomination basis instead of competitive bidding.

BT Online Bureau | August 17, 2012 | Updated 18:17 IST

The Comptroller and Auditor General (CAG)in its report on coal block allocation indicted the UPA government and pointed towards lack of transparency in awarding process to private players that resulted in a loss of a Rs 1.85 lakh crore to the exchequer as on March 11 last year.

The CAG report was tabled in Parliament on Friday, said the coal blocks were allocated to the private companies on nomination basis instead of competitive bidding. The government auditor in its report names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.

In its report on coal block allocation CAG also said bidding process was vitiated by allowing Reliance Power to use excess coal from three blocks allocated to Sasan project.

"Delay in introduction of the process of competitive bidding 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," CAG 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 Coal India 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," CAG said.

The auditing body said it is "of strong opinion that there is a need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on consumers".

The concept of allocation of captive coal blocks through competitive bidding was announced in 2004. However, government is yet to finalise the modus operandi of competitive bidding .

With agency inputs


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