The Coal Ministry has contested before the PAC the CAG calculation that coal block allocations led to financial gains to the tune of Rs. 1,85,591 crore to private players, saying that it is flawed on “basic fundamentals” related to the geological sector.
It also said that the “basic intent” of the government behind “such allocation” of coal blocks was to induce rapid development of infrastructure by involving the private sector to invest in identified priority sectors.
Taking into account the average sale price of all grades of coal of Coal India Ltd (CIL) in opencast mines as well as average cost price of all grades of coal in the PSU and adding additional financial costs, the CAG has calculated a financial gain of Rs. 1,85,591.34 crore to private parties.
The auditor is of the view that a part of this financial gain could have been tapped by the government by taking timely decision on competitive bidding for allocation of coal blocks.
In its response to the CAG report, the Coal Ministry has told Parliament’s Public Accounts Committee that transparent procedures were observed while recommending allocations by following a “broad policy framework“.
“It is to be stated that the calculation of the said financial gains were flawed on certain basic fundamentals related to the geological sector,” the Ministry has told the PAC in a written submission.
The financial gains to private parties have been computed on the basis of the difference between the average sale price and the production cost of the CIL, as well as estimated extractable reserves of the allocated coal blocks, the Ministry said.
“This computation of extractable reserves based on averages would not be correct in the geological sector. Moreover, as the coal blocks were allocated to private companies only for captive purposes for specific end-uses, it would not be appropriate to link the allocated blocks to the market price of coal,” the Ministry said.
Firms made fraudulent claims: CBI
Meanwhile, the CBI has alleged that some companies which were allotted coal blocks between 2006 and 2009 had “misrepresented” facts and made “fraudulent” claims to “embellish” their applications to get the allotments.
The agency also accused officials of Coal Ministry of entering into conspiracy and “wilfully” not scrutinising the documents to allow “undue advantage” for the companies in getting the blocks.
The CBI, in its four FIRs filed in a court in New Delhi, has named private firms — M/s Jas Infrastructure Capital Pvt Ltd (JICPL), M/s AMR Iron and Steel Pvt Ltd, M/s Vini Iron and Steel Udyog Ltd and M/s Navabharat Power Pvt Ltd — as accused.
Besides these four firms, their directors along with some unknown public servants of the Ministry of Coal and Jharkhand and others have also been named in the FIRs lodged on September 3, 2012 after a preliminary enquiry which was initiated on the reference of the Central Vigilance Commission (CVC).
The CBI told the court that a regular case has been registered under sections 120-B (criminal conspiracy) read with 420 (cheating) of the IPC and 13 (2) read with 13 (1) (d) of Prevention of Corruption Act 1988 against AMR Iron and Steel Pvt Ltd, Nagpur, its directors namely Arvind Kumar Jayaswal, Manoj Jayaswal, Ramesh Jayaswal, Devendra Darda, son of Vijay Darda alongwith unknown public servants of Minister of Coal and unknown others.
The agency, in its FIRs against JICPL, Vini Iron and Steel Udyog Ltd and Navabharat Power Pvt Ltd, has said that in order to “embellish its claim for allocation of coal block”, these firms “fraudulently” claimed that they were having the required net worth to get the coal mines.
“Enquiry also revealed that officials of the Ministry of Coal in pursuance of criminal conspiracy, wilfully and purposefully, did not scrutinise the aforesaid documents regarding the false claims/concealment of facts by Navabharat Power Pvt Ltd and thus facilitated the company in getting undue advantage in allocation of the Rampia and Dip Side of Rampia Coal Blocks,” the CBI said.
Keywords: Coalgate, coal scam, coal blocks allocation, CAG report, Coal Ministry response, PAC, CBI probe
The Cheap arguements to contest the valuation shows that parties received Windfall from these allocations. Geolgical Risk, Mining risk etc are adjusted by proper Capitalization rate. To argue that captive mines do not get market prices of coal is phony arguement. For FAIR Market Valuations one has to use market prices with inflation adjustment. So question the Valuation is a sad fact to hide once's mistake. In addition, if not for anything else, government should cancel all these leases, because they did not achieve government stated goals. Think of China what would happened to the allottees.
Mr.Ramaswami,
CAG scaled down the loss figure, deferring to what the Ministry suggested in the Exit meeting.In any case, the Minstry's sabmission on Oath seems to run counter to what the CBI says!
was this not brought out in the audit report at the initial stages and what was the officers of the coal ministry doing at that meeting. there should also have been a final meeting before the audit report was prepared and sent to CAG for finalization and final report submitted. were these points not at all discussed at any of the earlier meetings. at least there should have been three rounds of meeting before the report is finalized as per my practical experience.
the amount of loss is not at all important in a country where crores of people do not
have one squre meal a day. the charge is why revenue to Govt. was not optimised
and why a select were allowed to enrich themselves
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