Indian Government Lose Money In Coal Block Allotment

Comptroller and Auditor General (CAG) report tabled in parliament on friday said that private companies including Tata Steel, Essar Power, JSPL,Hindalco and Adani Power were likelying gain Rs. 1.86 lakh corer from coal blocks that were allocated them on nomination basis instead of competitive bidding, which will result in a loss to the national exchequer.\

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. 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 gains to the tune of Rs.1.86 lakh crore likely to accrue to private coal block allotes," The CAG report said. " The government could have tapped a part of this financial benefit by expediting decision on competitive bidding for allocation of coal blocks," the report said. 

It could accured to the national exchequer by operationalising the decision taken by years earlier to introduce competitive bidding for allocation of coal blocks, if added.

There was no specific criteria for allocation of coal blocks in the country till 1993, from 1993 onwards, Ministry of coal started awarding blocks to private parties for captive mining on recommendations of the inter-ministerial screening committee or through direct allocation. the concept of allocation of captive coal blocks through competitive bidding was first announced in 2004. However, the government is yet to finalise the modus operation of the mechanism. in the meantime, 194 coal blocks were allocated to different Government and Private parties up to March31 2011. The official Auditor said it is for strong opinion that there is a need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on consumers". TO bring objectivity and transparency in the allocation and for tapping of a part of benefit for accruing to the allottees of  captive coal blocks, the CAG said the coal Ministry should "Urgently" work out modalities to implement the procedure of allocation of coal blocks captive mining through competitive bidding. the CAG also said coal India has suffered production losses to the tune of 116 million tonnes (MT) on account of delays in execution of new project.

Delays ranging from "one to 12 years in execution of 32 projects under different subsidiaries of CIL  entailed "loss of production by 115.958 MT" if said.