The Comptroller and Auditor-General led by Vinod Rai will make a presentation on Friday before the Murli Manohar Joshi- headed Public Accounts Committee, explaining its report on “Allocation of coal blocks and augmentation of coal production,” at a meeting that is expected to be stormy as Congress MPs and its allies plan to take on the CAG.
This will be the first PAC meeting on the Coalgate report, which led to Parliament’s monsoon session getting washed out. According to the watchdog auditor, the exchequer suffered a notional loss of Rs. 1.86 lakh crore owing to the government’s failure to introduce competitive bidding in allocation of coal mines between 2004 and 09. The presentation by Mr. Rai’s team in the morning will be followed by Coal India Limited and Coal Ministry officials’ response to the CAG report. “The CAG had been sounded three to four years ago by the PAC for taking a close look at the allocation of mines issue and also how CIL had undertaken projects in PPP [public-private participation] mode. In fact, it would not be wrong to say it was the PAC that had prompted this present deeper investigation by the CAG which has led to submission of this explosive report,’’ said a PAC member n condition of anonymity.
On the other hand, the Congress MPs on the panel have prepared a long list of questions and points to back their claim that the auditor’s calculations were faulty and misleading. Their defence would stress that UPA II did not deviate from the policy that was framed in 1993 for allocation of coal blocks.
The Coal Ministry has already asked CIL, the Central Mine Planning & Design Institute Limited (CMPDIL) and the Coal Controller to prepare a report on the issues raised by the CAG and their part of the replies to be presented before the PAC.
The CAG report contains an executive summary and six chapters. Chapter 6, “Calculation and Recommendation,’’ contains suggestions for action by the Coal Minister, the Coal Controller and CIL. In other chapters, there are references to CMPDIL with reference to the drilling capacity and to CIL with reference to its production performance. Chapter 3 is related to coal production by CIL. Chapters 4 and 5 deal exclusively with allocation of coal blocks and production performance of captive coal blocks. “Since the issues are inter-related, it is requested that CIL, Coal Controller and CMPDIL give their comments/material to enable preparing of an action taken note (ATN) on the CAG report,’’ says a communication from the Director-Finance, Coal Ministry.
The Ministry is learnt to be ready with a five-pronged strategy to counter the CAG report on coal allocation. It is likely to advance arguments, countering the CAG’s calculation of the quantum of extractable reserves.
Stating that the CAG computed financial gains based on the difference between average sale price and the cost incurred by CIL, the Ministry will argue that cost of production varies with different mines, that only difficult mines were allocated to private firms compared to CIL and that if private firms benefited, the government too benefited through various taxation measures. The Ministry is likely to state that under the new MMDR Bill the government will get more than 25 per cent of miners’ profits and the coal blocks given to private firms were only for specified end-uses.