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LATEST NEWS UPDATES | Coal Min hits back at CAG: report ‘fallacious, erroneous’-Priyadarshi Siddhanta

Coal Min hits back at CAG: report ‘fallacious, erroneous’-Priyadarshi Siddhanta

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published Published on Mar 27, 2012   modified Modified on Mar 27, 2012

The coal ministry has told the national auditor that its observations about “windfall gains” to private and state-run entities as a result of allocation of coal blocks without auction were “fallacious and erroneous”.
 
The ministry has rejected the Comptroller and Auditor General’s (CAG)’s observation that due process was not followed in allocating blocks, and insisted that a “fair and transparent” system was followed, and decisions taken after intense scrutiny and extensive deliberations.

The CAG in a recent report said that the government had extended undue benefits amounting to Rs 10.67 lakh crore to commercial entities by giving them 155 coal blocks without auction between 2004 and 2009. In his reply, Coal Minister Sriprakash Jaiswal said the CAG’s observations were “ notional and imaginary”, and reminded the auditor that the allocation process was open to all, and those who had technical and financial wherewithal were considered for allocation.

“Right from the inception, the government did not reckon the coal blocks allocation system as a revenue generating process. When the clamour for blocks grew and a sufficient need to switch over to the competitive bidding process was felt, action was initiated, albeit belatedly, which culminated in the legislative changes,” the minister said.

Moreover, gains would accrue to the allottees if they had the choice of either buying the fuel from Coal India Ltd or producing coal from their blocks. “Since CIL was not able to cater to the entire country’s demand, so comparison with the Maharatna company price to arrive at windfall gain is only notional. While the concept of windfall gain is itself fallacious, even the calculation of the purported windfall gain appears to be erroneous,” Jaiswal told The Indian Express.

Jaiswal has argued that there can be no loss or gain on account of allocation of blocks to state-run companies, as allocating to them without bidding is permissible even today. He pointed out that 62 blocks have been allocated to government firms with geological reserves of 15.35 billion tonnes (BT) and any possible gain from them would only accrue to the central or state governments.

The minister said the CAG had calculated profits at 100 per cent and 90 per cent of the geological reserves, whereas mineable reserves in open cast mines is 75-80 per cent, and in underground mines extractability is only 40-50 per cent. “Accordingly the calculations made are not correct. Further there would be faults as other geological constraints and surface features can reduce the mineable reserves,” the minister said.

“It may not be advisable to indicate windfall gain. It may also not be advisable to quote any figure of gain since the estimates may vary considerably,” the ministry told the CAG.

The Indian Express, 27 March, 2012, http://www.indianexpress.com/news/coal-min-hits-back-at-cag-report-fallacious-erroneous/928850/


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