Report names Essar, Tata and Jindal Steel and Power among beneficiaries
The Comptroller and Auditor General's (CAG) final report on the allocation of coal blocks and coal production, says that the private sector made a windfall gain of Rs 1.86 lakh crore between 2004 till now. This happened because the government failed to implement its own decision to introduce competitive bidding for coal blocks that was taken years ago. A part of this profit would have gone to the public exchequer. Many of these coal blocks are yet to start production because the government agencies failed to monitor development of mining in these blocks, the report uploaded on the CAG website states.
In March this year, a leading newspaper accessed the draft CAG report, which estimated the losses to the government at Rs 10.7 lakh crore—about 10 times more than spectrum allocation scam. However, CAG chief Vinod Rai was reported to have clarified that the estimates of losses made in the draft report were not to be taken as the final outcome of the report. On Wednesday, Union Finance Minister P Chidambaram had announced that the final CAG report would be tabled in the ongoing monsoon session of Lok Sabha. The findings of the CAG report led to a furore in the Lok Sabha on Friday. The minister of state in the Prime Minister's Office, V Narayanasamy, said that Public Accounts Committee (PAC) would examine the final CAG report and that a decision would be taken on it thereafter.
Union coal minister Sriprakash Jaiswal defended the government's coal allocation policy. He said the government does not fully agree with all the aspects of the CAG report. “The policy adopted by the government to allocate coal blocks is not faulty. The report was made on only a few aspects of allocation process,” he said. While the minister defended the allocation of the blocks to the private players, saying meeting energy needs was the prime concern of the government, the CAG report notes that there is a “widening gap between the demand and domestic production of coal and consequent increase in coal imports”.
Incidentally, the concept of competitive bidding process was first introduced on June 28, 2004, a month before allocation of coal blocks on a large scale was initiated by the government. But it was only on February 2, 2012, after a gap of eight years, when 142 coal blocks were allocated to various private and public players, that an amendment was made in Mines and Minerals (Development and Regulation) Act, which put competitive bidding of coal blocks in place. The CAG report gives an exhaustive account of how competitive bidding was marred by various bureaucratic procedures, while private players made the most of the gains.
They made a killing
The CAG report names names 25 companies, including Essar Power, Hindalco, Tata Steel and Power, Adani Group, Lanco, Vedanta group, Arcelor Mittal, Jindal Steel and Power and even smaller companies such as Nagpur-based Abhijeet Group and Delhi-based Bhusan Power and Steel for making windfall gains due to the lack of bidding process. The public exchequer also incurred loss of up to Rs 311.81 crores for not been able to recover the bank guarantee from the coal block developers, who failed to start mining in these blocks.
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