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Auditor triple whammy hits govt in Parliament
-The Indian Express

Three new reports by the Comptroller and Auditor General (CAG) of India increased the heat on the embattled government on Friday. The statutory auditor’s report on coal block allocations, implementation of public-private partnership at the Delhi International Airport and the award of ultra mega power projects (UMPP), tabled in Parliament, accused the government of indulging in favouritism, irregularities in bidding processes, and causing massive losses to the exchequer.

The BJP demanded a response from Prime Minister Manmohan Singh to charges pertaining to the allocation of coal blocks between 2004 and 2006, when he was in charge of the coal ministry.

“This is not just a scam, it’s a case of murder and loot. We would like an answer from the prime minister on charges made by the CAG,” BJP spokesperson Rajiv Pratap Rudy said minutes after the report was tabled in the Rajya Sabha.

In its defence, the government stressed that the figures in the reports were not final, and accused the auditor of exceeding its brief. “According to me, the CAG is not following its mandate, which... I wish to bring to notice,” Minister of State in the PMO V Narayanasamy told reporters in Delhi.

Narayanasamy insisted that the CAG’s reports were incomplete as they were yet to be examined by Parliament’s Public Accounts Committee (PAC).

“They (CAG reports) have to be tested before Parliament. It comes before the PAC. The PAC is like a mini Parliament. It will consider the views of political party members. Then only it will become final. Therefore, draft report will not become final,” he said.

In its report on coal block allocations, the CAG said that a gain of Rs 1.86 lakh crore was likely to accrue to private companies including Tata Steel, Essar Power, JSPL, Hindalco and Adani Power from allocation of 57 coal blocks without competitive bidding.

“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,” the report said. These mines were allocated between 2005 and 2009.

The auditor said it arrived at the estimates based on the average cost of production and average sale price of opencast mines of Coal India in 2010-11. “The government could have tapped a part of this financial benefit by expediting decision on competitive bidding...,” the report said.

The report on the Delhi International Airport Ltd (DIAL) slammed the government for giving out Delhi airport land with a potential earning capacity of Rs 1,63,557 crore to the private operator which made a total equity contribution of only Rs 2,450 crore, for which it got a brownfield airport for 60 years.

The CAG criticised the levy of development fee on passengers, accused the civil aviation ministry of violating bid conditions to benefit DIAL to the tune of over Rs 3,415 crore, and pressed for a fixing of responsibility.

GMR, the operator of DIAL, said it had “not received any undue benefits from the government” before, during or after the bidding process. “The entire process of the privatisation and selection of joint venture was based on a transparent, international, competitive bidding which was guided and presided over by competent bodies and has been upheld as such by the Supreme Court in 2006,” GMR said.

The CAG report on UMPPs said the bidding process was vitiated by allowing the selected developer, Reliance Power, to use excess coal from three blocks allocated to the Sasan project. This allowance to Sasan UMPP, the first of these 4,000 MW projects to get off the block, resulted in a financial gain of  Rs 11,852 crore to Reliance Power, the auditor said.

“Audit has estimated the financial benefit that will accrue to the project developer on the basis of comparison of tariff of Sasan project (Rs 1.196/unit) with that of Chitrangi (Rs 2.450/unit for Madhya Pradesh and Rs 3.702/unit). The overall financial benefit to Reliance Power due to impact of difference in tariff works out to Rs 29,033 crore with a net present value of Rs 11,852 crore,” the report said.

In reply, Reliance Power, in a filing with the BSE, said the company had no role in the allotment of coal reserves to the Sasan UMPP.

Stocks of most companies named in the CAG’s reports were hit. Reliance Power fell 5.60 per cent to Rs 87.70, while GMR Infrastructure fell 3.07 per cent to Rs 20.55.