| Coal allocation costs billions to exchequer: CAG |
NEW DELHI The state auditor, Comptroller and Auditor General (CAG), on Friday accused the federal government of allocating coal blocks, power projects and land for Delhi’s flagship airport at a fraction of market prices, potentially costing the exchequer tens of billions of dollars in lost revenues.
The main opposition party demanded an immediate explanation from the beleaguered government of Prime Minister Manmohan Singh, particularly about one report that suggested private companies made windfall gains of about $33 billion because of the underpriced sale of coal fields.
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,” opposition Bharatiya Janata Party (BJP) leader Rajiv Pratap Rudy said after the report was released. The party also sought prime minister’s resignation.
In a draft of its report, which was leaked earlier this year, the state auditor estimated that private companies’ “windfall” gain from allocations had amounted to a much larger figure, $211 billion.
Singh has lurched from crisis to crisis since the same auditor uncovered corrupt practices two years ago in the sale of telecoms licences.
Shares in Reliance Power, India’s second-largest power producer by market value, tumbled on Friday after they were mentioned by the CAG in the auditor’s reports which were presented in Parliament.
Singh’s office maintains the government was simply following established policy, and before the report was released, Singh denied there had been wrongdoing.
“The report will not stand because it is not based on proper evidence,” said V Narayansamy, a junior minister in the prime minister’s office. Coal Minister Sriprakash Jaiswal insisted that calculations were faulty and notional.
In another report, CAG also said airport land was allocated at a tenth of its market value, giving the developers an undue profit of $4.3 billion.
Shares in GMR Infrastructure Ltd, who the auditor said was sold the airport land too cheaply, fell sharply.
India has for years allocated coal blocks directly to companies on the basis of recommendations by state governments. Since 2004 the government has said it will change to more transparent auctions, but had not done so even in February of this year, the report said.
“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.
The report said Reliance, controlled by billionaire Anil Ambani, gained Rs290 billion ($5.2 billion) in undue benefit from the government decision on surplus coal.
The auditor also pulled up the government for what it said was unduly favouring the GMR Infrastructure Ltd led consortium that was awarded the contract for the upgrade of the international airport in New Delhi in 2006. The report on airport also slams the levy of development fee on passengers and says the civil aviation ministry violated the bid conditions for the benefit of GMR-led DIAL to the tune of over Rs34.15 billion.
Agencies
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