Coal scam: Govt loses Rs 10.6 lakh crore

In another huge embarrassment to the government after the 2G fiasco, the Comptroller and Auditor General (CAG) has estimated a Rs 10.6 lakh crore loss to the exchequer on account of allotment of coal blocks during 2004 to 2009 without auction to 100 private and public sector companies.

In a draft report on allotment of coal blocks that has created a political storm, the official auditor has estimated a "windfall gain" of Rs 6.31 lakh crore (PSUs - Rs 3.37 lakh crore and private parties - Rs 2.94 lakh crore) based on the prices prevailing during the year of allocation on constant cost and price basis and as on March 31, 2011.

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The amount at current prices would now work out to Rs 10.67 lakh crore (PSUs - Rs 5.88 lakh crore and private parties - Rs 4.79 lakh crore), the CAG said in the draft report.

In its reply, the Coal Ministry said in June 2004 that there was a substantial difference between the price of coal supplied by Coal India Ltd (CIL) and the cost of coal produced

through coal blocks allocated for captive mining and as such there was windfall gains to the allotees, part of which the government wanted to tap through competitive bidding.

"The windfall gains to the allotees were expected to be substantial," it had stated.

The CAG report comes more than a year after its report on the allocation of scarce 2G telecom spectrum on first-come-first-service basis in which it had estimated a presumptive loss of Rs 1.76 lakh crore to the exchequer.

Amid media reports that undue benefits of Rs 10.67 lakh crore were extended to private and public sector companies in allocation of coal blocks, the government on Thursday said it followed a transparent process in giving mining rights to the firms.

"We gave advertisements for allocation of coal blocks and invited applications...after the applications were received by us (Coal Ministry), the state governments were consulted and thereafter the coal blocks were allocated," Coal Minister Sriprakash Jaiswal told PTI.

"The coal blocks are allocated through a screening committee which is chaired by Coal Secretary," he said, when asked to comment on media reports that Comptroller and Auditor General (CAG) in its draft report said that the government lost Rs 10.67 lakh crore by not auctioning coal blocks.

The issue of allocation of coal blocks was raised in Parliament and lead to disruption of proceedings in the Lok Sabha and the Rajya Sabha.Jaiswal also said he did not receive any such report from CAG.

"We did not receive any report of CAG then how can we say whether its report is right or not," he said.

According to a media report, the CAG's draft report said that the government benefited private and public sectorcompanies by allocating them 155 coal blocks without auction between 2004-2009.

Jaiswal, however, said that the UPA-I started the practice of awarded coal blocks through advertisements,discontinuing the earlier practice. He said that between 1993 and 2004 scores of coal blocks were awarded without issuing any advertisements.