NEW DELHI - India’s auditor suggested Friday the government lost billions of dollars by failing to auction valuable coal mining rights in a damning report that implicated Prime Minister Manmohan Singh.
The Comptroller and Auditor General (CAG) estimated that since mid-2004 private operators who won coal blocks without competition may have enjoyed “financial gains to the tune of 1.86 trillion rupees ($33.4 billion)”.
“A part of this financial gain could have accrued to the national exchequer,” it added, without giving an estimate for the total loss to the state or alleging that there had been corrupt or criminal practices. It said the problems of granting coal rights for free instead of inviting bidders had been raised as far back as June 2004 when coal officials had discussed the potential for private groups to make windfall profits. Since then, a new policy had been repeatedly delayed and 142 coal blocks had been allocated to various large firms, including Essar Power, Tata Steel and Jindal Steel and Power. “This allocation lacked transparency and objectivity,” the CAG concluded.
Singh, who has been prime minister since 2004, also served as coal minister from 2004-2009, and the CAG documented a number of official meetings, memos and directives about the need for new legislation.
Singh’s coalition government, dominated by the left-leaning Congress party, has been beset by a string of corruption cases since re-election in 2009 and the latest allegations of mismanagement led to renewed pressure on him.k
“Whatever has happened, the PM is directly responsible. He cannot escape,” the parliamentary leader of the opposition Bharatiya Janata Party (BJP), Sushma Swaraj, told reporters. “UPA’s (the coalition government’s) term is filled with several examples of corruption... each one is bigger than the previous one and this one is the biggest scam so far,” she alleged.
Coal Minister Sripraksh Jaiswal hit back at the CAG’s findings, saying the government did not agree with the figures or methodology. “The mechanism adopted for coal allocation was transparent,” he countered.
The dispute echoes a fight in 2010 when the auditor claimed the mis-selling of mobile phone licences on a first-come-first-served basis instead of an auction had cost the treasury up to $39 billion - a figure the government angrily rejected.
The then telecom minister A Raja and other ministry officials have since been put on trial accused of using their powers to twist the process to favour certain companies.
The CAG released its audit entitled “Allocation of Coal Blocks and Augmentations of Coal Production” against a backdrop of a huge problems in the state-dominated sector, which is vital for India’s economic development.
State-owned Coal India, the world’s biggest coal producer, has been struggling to raise output to meet the demands of power producers, leading to electricity shortages that constrain companies and inconvenience consumers.
The idea of allocating coal resources to private companies, which then supply to key industries such as electricity, cement or metals, was intended to boost production by bringing in new capital and technology.
More than half of the India’s electricity comes from coal-fired power stations, some of which are lying idle because of supply shortages or are being forced to resort to importing expensive foreign coal.
At the beginning of the month, a mammoth power cut blacked out half the country, affecting an area home to 600 million people when three regional electricity grids collapsed partly due to over-demand.
In March, Coal Minister Sriprakash Jaiswal explained that the prime minister had agreed in 2004 in principle to have competitive bidding for the sale of coalfields but the process had taken time due to the complexities involved.