<div>The fresh furore over the Comptroller and Auditor General (CAG) report on coal block allocation is yet another reason why slow decision making in government could get even slower.<br /><br />The CAG has used some strange accounting to put a figure of loss on coal block allocation. Several questions can be raised on the policy of coal block allocation to private companies. Issues of transparency can be raised. But all this does not point to a scam or a loss.<br /><br />At one level, reformists seek out-of-the-box solutions to resolve matters of pressing concern. The fact is that the government allocated coal blocks to private power producers on recommendations of chief ministers. This policy was followed for more than 15 years.<br /><br />This was done to ensure speedy linkages for power projects that were desperate for fuel. Public money was lent to these power producers on the basis of these coal block allocations.<br /><br />At a time when Coal India is not meeting the demand for fuel, it made sense for the government to allow private use of coal. The coal blocks allotted to private companies had been neglected by Coal India for years.<br /><br />It's not as if the coal given to companies was resold to a third party. In the telecom scam, companies acquired licences at cheap rates in a fraudulent manner and then sold it for a profit.<br /><br />Nothing like that happened in the coal sector. Coal was allocated to produce power that is sold at rates decided by the state power regulatory body. The companies that got the coal allocation paid a nominal price for the blocks. Some of them had to promise to sell a certain percentage of the power produced to the state government at controlled rates. The rest could be used to sell to the national grid.<br /><br />So the scope of the companies to make undue profits was severely limited.<br /><br />Most importantly, the irony is that coal has not been extracted from most of the blocks that were allocated to power producers. The reason? Many clearances including those from the environment ministry have not come through.<br /><br />The so-called loss of Rs 1.86 lakh crore has been calculated by CAG for coal that still lies buried in the ground.<br /><br />Now let's examine the issue of auction of coal blocks. Now this is worth a healthy and informed debate. Should coal be auctioned to get the maximum market price from power producers? If so, then can the power producer recoup its cost from the consumers? Will the electricity regulatory authorities allow power producers to hike tariffs if the cost of fuel is high?<br /><br />If the cost of fuel is at market rates, then shouldn't the price of power be also at market rates? Will retail, agricultural and industrial buyers of power accept rates that have been boosted by high price of coal?<br /><br />The UPA government is at fault for not putting a robust and transparent coal allocation policy in place. It is at fault for not creating a comprehensive energy policy that would leave no scope for scam or scandal.<br /><br />But the UPA government has not caused a loss of Rs 1.86 lakh crore by allocating coal blocks. If there is a whiff of corruption, the blocks can be cancelled. The coal is still in them. And if there is corruption, then chief ministers of states that recommended the allocations are also likely to be implicated.<br /><br /><br />(<em>Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com</em>)<br /><br /><br /> </div>
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