Coal Ministry contests CAG claim before PAC

Updated - November 17, 2021 04:13 am IST

Published - September 26, 2012 04:14 pm IST - New Delhi

In this file photo, workers load coal onto trucks at a depot on the outskirts of Jammu. The Coal Ministry has contested the CAG calculation that coal block allocations led to financial gains to private players.

In this file photo, workers load coal onto trucks at a depot on the outskirts of Jammu. The Coal Ministry has contested the CAG calculation that coal block allocations led to financial gains to private players.

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.

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