CAG Takes On Government Over Coal Sales

The Comptroller and Auditor General (CAG) on Friday accused the government of allocating dozens of coal blocks at a fraction of their market price, costing the exchequer potential revenues of around $33.3 billion.

The Bharatiya Janata Party leapt on the CAG report to put fresh pressure on the beleaguered government of Prime Minister Manmohan Singh, demanding an immediate explanation.

"The procedure followed for allocation of coal blocks to captive consumers lacked transparency as the allotments ... were made merely on the basis of recommendation from state governments and other administrative ministries without ensuring transparency and objectivity," CAG said in its report.

CAG said a delay in introducing competitive bidding had rendered the sale process between 2004 and 2009 beneficial to the private companies.

In a draft of its report, which was leaked earlier this year, CAG estimated that private companies' "windfall" gain from allocations had amounted to a much larger figure, $211 billion (Rs 1,175,270 cr).

The opposition has sought to link Singh, who was in charge of the Coal Ministry in 2006, to the affair, which the media has dubbed "Coalgate".

"We want an explanation from the prime minister who was in charge of the Coal Ministry during the period of sale," BJP leader Rajiv Pratap Rudy told reporters after the report was released.

The ruling Congress Party had no immediate comment.

Singh's government has lurched from crisis to crisis since graft in the sale of telecoms spectrum surfaced two years ago, culminating in the quashing of licenses. The telecoms sale may have cost the government up to $36 billion (Rs 200,520 cr).

India is the world's third-largest coal producer after China and the United States, but output has struggled to keep up with consumer demand for electricity.