CAG report: Coal block allocation scam
The government's own auditor the Comptroller and Auditor General (CAG) ad tabled the report on the allotment of the coal blocks which mentioned that there was a loss of Rs 1.86 lakh crores according to the surveys conducted. Such loss of a ginormous proportion indicates the incapacity of the government to manage the natural resources in the nation and the extent of the corruption that prevails in the system.
Back in 2004 itself, the government had acknowledged that the then existent mode of allocation of the coal mines was a poor form of allotment and to say the least not transparent. There was even an internal debate to make reforms to the allotment routes after a coal secretary has asked for 28 June 2004 deadline for reforms in the allotment process. However, the government turned a deaf year and the matter was completely ignored until the scam had resurfaced eight years later.
The now allotted mines were not completely transparent too. The coal block allocations which should have taken place on the basis of merit were allotted to the veneer of merit which had hidden the political patronage underneath it. A “screening” committee consisting officials from the producing and consuming sectors inspected the proposals. What ensued is what you see today, gross mis-governance. The bidding system which was approved to be introduced but it never took the shape in reality with government making lame excuses to enforce it immediately. The nation is yet to see a competitive system.
In the CAG report, the auditor had made a very calculated estimate of the gains in favor of the private sectors whilst netting off the Public Sector Coal India from the cost of production. According to the report a major share of the undue profits could have gone in favor of the state owned Coal India if the bidding procedure was used. But it also had no solution to offer to correct the mistake of the government.
The government should ensure that the coal block allocations are renegotiated and the production should be expedited to cover the losses incurred.
Meanwhile the Bharatiya Janata Party had adopted the Carpe diem policy pouncing upon the chance to strike at the ruling Congress. The opposition leaders had stalled the Parliament Monsoon sessions without allowing the house to function as the Congress had not yearned to their demands. The BJP sought nothing but the resignation of the Prime Minister Manmohan Singh after he accepted the responsibility for the mismanagement in the coal block allocation.
They had also lashed out at the government that the coal block were sold at a price that was much lower than the market value thereby incurring huge losses to the exchequer of the nation.
Coal Minister Sriprakash Jaiswal said that an inter-ministerial group (IMG) has started reviewing the allocation of 58 coal fields to companies that were issued show-cause notices. He added that they would submit a report by September 15.
Officials from the ministries of steel, power, economic affairs, industries and law and is chaired by the additional secretary Zohra Chatterji of the coal ministry comprise the IMG.
The Central Bureau of Investigation (CBI) booked cases against five companies after it had suspected irregularities and partisan nature in the unfair and controversial allocation of coal blocks after it had conducted raids in 11 cities on Tuesday.
Five companies against which the Central Bureau of Investigation (CBI) registered first information reports (FIRs) on Tuesday:
1. Vini Iron and Steel Udyog Ltd
2. Jas Infrastructure Capital Pvt. Ltd
3. AMR Iron and Steels Pvt. Ltd
4. JLD Yavatmal Energy Ltd
5. Navabharat Power Pvt. Ltd
Can the government undo the losses incurred? Would the re-negotiations be any fairer than before? Would competitive bidding finally take its shape in the coal block allocations?
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