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Scrap coal blocks, CAG likely to say

  • NEW DELHI: The Comptroller and Auditor General is likely to make a strong pitch for scrapping all the controversial allocations of coal mines during its presentation to Parliament's Public Accounts Committee.

    Sources said the auditor looks set to cite total lack of transparency in the recommendations made by the screening committee for allocation of coal blocks worth thousands of crores. In its presentation to the PAC likely next week, the auditor is planning to show how the committee failed to make any comparative evaluation of the applicants, thus establishing that the allocations were influenced by extraneous considerations. "There is nothing in the records we have painstakingly examined to suggest otherwise," said a source familiar with the details of the presentation readied for what is going to be a crucial session of the parliamentary panel.

    The eligibility of applicants was not examined either, sources said. A test check on companies which got mines showed there was little to distinguish these from those who failed to pass muster with the screening committee.

    Sources said there was a strong ground for the government to cancel the allocations. Apart from other things, there are instances of allocations of mines being withdrawn on ground of non-performance: a consideration which is relevant in the current case as by the government's own admission, only one of the 57 mines in question has been operationalized.

    The guidelines of the coal ministry provides that captive blocks should commence production within 36 months in case of open cast mines and 48 months for underground mines from the date of allocation.

    BJP, Left and BJD have demanded revocation of the controversial allocations.

    The PAC is likely to schedule discussions on the CAG report on Coalgate as early as next week.

    The CAG's bold plan to defend its report comes in the wake of strident attacks from Congress. On Monday, Prime Minister Manmohan Singh had rejected the CAG's findings, suggesting that it had erred in estimating gains for private players. Singh also said the auditor's views were at odds with the requirements of parliamentary democracy and a federal polity.

    Sources in the auditor said the defence put forward by the government why the mines have not been operationalized has strengthened CAG's argument that many companies picked by the screening committee had just "hoarded" the natural resource to boost their valuation at a future date. "The parallel with the 2G spectrum scam is striking," said another source in CAG.

    "Their only objective was to wait and wait and reap windfall gain at a later stage as coal prices, both domestic and imported, were rising," he further said.

    The PAC meeting, set to be a tumultuous affair, will add to worries of a government which has spent the last 10 days trying to prevent the BJP from feasting on the auditor's findings.

    Sources said the government will have to marshal all its persuasive skills to defend individual allocations. For instance, in the case of Fatehpur coal block, of the 69 applicants, only 36 were selected to make presentation before the screening committee. There is no record to explain why others were denied the opportunity. Coal ministry papers also give no reason why the block was awarded to SKS Ispat & Power Ltd and Prakash Industries Ltd.

    In case of Rampia coal block, 108 applications were received. Out of them, only two were asked to make presentation before the screening committee. The committee, however, recommended six companies - Sterlite Energy Ltd, GMR Energy Ltd, Lanco Group Ltd, Navbharat Power Ltd, Mittal Steel India Ltd and Reliance Energy Ltd -- for allocation of Rampia and its dipside.

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