CAG reports say govt gave a whopping Rs 3 lakh crore of 'undue benefits' to private cos

Aug 18 2012, 11:23 IST
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The concept of allocation of captive coal blocks through competitive bidding was announced in 2004. The concept of allocation of captive coal blocks through competitive bidding was announced in 2004.
SummaryCAG revealed record-busting amounts of benefits being given to entities like Reliance, Tata.

Already under attack over various scams, government today faced a fusillade from the CAG which has estimated "undue benefits" of over Rs 3.06 lakh crore to private parties in coal blocks allotment without bidding, Delhi airport development and diversion of coal to a power project.

The CAG attack came when three of its reports on coal allocation, development of Delhi airport by GMR-led DIAL and ultra mega power project of Reliance Power Ltd were tabled in Parliament today.

The Comptroller and Auditor General (CAG), however, brought down the estimated loss in the allocation of 142 coal blocks since July 2004 from Rs 10.7 lakh crore in the draft report to over Rs 1.85 lakh crore being the benefit to private allottees.

In the 'scam' CAG has estimated a potential earning capacity of Rs 1,63,557 crore to DIAL when it was given Delhi airport land on a concessional lease.

The Prime Minister, who held the coal portfolio for a considerable time during the period also escaped any adverse notice of the official auditor and the blame fell on the Screening Committee consisting of officials for the allocation "which lacked transparency, objectivity and competition".

The beneficiaries of coal block allocation included Essar Group, Jindal, Adani, ArcelorMittal and Tata Steel.

The Opposition was quick to capitalise on the CAG reports with BJP demanding the resignation of Prime Minister Manmohan Singh taking "moral, political and personal" responsibility for the wrongful loss due to coal block allocations.

However the Government rubbished the reports with Coal Minister Sriprakash Jaiswal saying they were not in agreement with the CAG calculation while Minister of State in the PMO V Narayanasamy said the auditor has not followed the Constitutional mandate.

The auditor slammed the Civil Aviation Ministry and Airport Authority of India (AAI) for allowing DIAL to levy a development fee on passengers that would give it over Rs 3,415 crore "vitiating the sanctity of the bidding process".

DIAL had just made an equity contribution of Rs 2,450 crore and use the development fee to part fund the project.

The CAG was also critical of allowing Reliance Power to divert coal meant for Sasan ultra mega power project in Madhya Pradesh to its other plant, thereby giving it a benefit of Rs 29,033 crore.

Dealing with captive coal mining, envisaged to encourage private sector participation, the CAG said till 1993 there were no specific criteria for allocation of coal blocks.

Most of the allocation were done on the basis of

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