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LATEST NEWS UPDATES | Private firms got undue benefits of Rs 1.8L cr in 'Coalgate': CAG-Sanjay Dutta & Pradeep Thakur

Private firms got undue benefits of Rs 1.8L cr in 'Coalgate': CAG-Sanjay Dutta & Pradeep Thakur

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published Published on May 22, 2012   modified Modified on May 22, 2012

The Comptroller and Auditor General's final report on allocation of coal blocks between 2004 and 2009 without auction is expected to peg the value of "undue benefits" that the government extended to private entities alone at more than Rs 1.8 lakh crore, sources have indicated.

The last draft of the report, first reported by TOI on March 22, had said the government extended undue benefits of Rs 10.67 lakh crore by giving away 155 mines to 100 commercial entities, including public sector bodies, without bidding since 2004.

The government auditor has brought down the value of undue benefits by taking out public sector and state government entities from the final report and focusing only on private ventures. This was done at the coal ministry's behest, which argued during the 'exit conference' that public sector entities are audited separately.

But even at the reduced level, the value of undue benefit to coal block allottees is higher than the outer limit of the Rs 1.76 lakh crore-loss estimated by CAG in the 2G spectrum allocation case.

Besides, removal of public sector and state entities from the final report would mean the entire undue benefit of over Rs 1.8 lakh crore has accrued to private entities alone. The final report can still cause discomfort to the government .

CAG's coal report in House today?

Sources said the Comptroller and Auditor General's (CAG) final report on allocation of coal blocks has been lying with the government since May 11 and may be tabled in Parliament on Tuesday, the last day of the Budget session.

After TOI reported the final draft, the Prime Minister's Office had made light of the figure and selectively quoted from a letter to the PM written by CAG Vinod Rai to say it was "not even pre-final".

Even Rai was targeted by some economists and ministers. But on March 27, he hit back by saying CAG auditors had a global standing and did not make "fundamental errors".

"We are incapable of making fundamental errors as being discussed in media. Our report will make clear all doubts on fallacies being talked about... They (CAG auditors) are the best in the world. Both developing and developed countries send their auditors to train with us at our academies... the report (on allocation of coal blocks) will make clear how sound our processes are," Rai had said at the concluding session of a seminar on Public Accountability and Role of CAG.

The government auditor had calculated the undue benefit at the price of the lowest grade of coal. It first estimated the cost of production for each block by taking into account the actual cost of production in a similar Coal India mine for the same year. Then the difference between CIL's sale price and cost of production was multiplied by 90% of the reserves in each block. The figure thus obtained was the windfall gain for that block.

The reasoning behind taking 90% of the total reserves rather than the entire lot, according to CAG, is that "detailed exploration establishes reserves at a confidence level of 90%".

The final draft report said the coal ministry had in 2004 said that chances of any allottee not being able to recover this much from the reserves "would be, if at all, very remote".

The Times of India, 22 May, 2012, http://timesofindia.indiatimes.com/india/Private-firms-got-undue-benefits-of-Rs-1-8L-cr-in-Coalgate-CAG/articleshow/13365698.cms


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