<div>Lurching from crisis to crisis ever since the 2G scam was unearthed by CAG two years ago, Prime Minister Manmohan Singh was faced with three key CAG reports which were tabled in Parliament on 17 August indicting the government of causing a combined loss of crores of rupees to the national exchequer.<br /><br />The Comptroller and Auditor General (CAG) accused the 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.<br /><br />The much-awaited CAG report on coal block allotment said private firms are likely to gain Rs 1.86 lakh crore from coal blocks that were allocated to them on nomination basis instead of competitive bidding<br /><br />The audit report on Delhi airport 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. The consortium was granted rights for commercial use of 240 acres of land worth Rs 24,000 crore against an equity infusion into the project of just about a tenth - Rs 2,450 crore, This, when the consortium expected to generate revenue of Rs 88,337 crore for itself.<br /><br />The third CAG report flays post-bid concessions to Reliance Power and says the Anil Ambani-led firm got undue benefit of Rs 29,033 crore when the government allowed use of surplus coal from blocks alloted to Sasan power plant for its other projects. (<strong>Read: <a href="http://www.businessworld.in/web/guest/storypage?CategoryID=37491&articleId=479687&version=1.0&journalArticleId=479688">Reliance Power Unduly Gained</a></strong>)<br /><br />The Opposition, Bharatiya Janata 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 (Rs 1.86 lakh crore) because of the underpriced sale of coal fields.<br /><br />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".<br /><br />"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.<br /><br />The government on its part rejected the CAG report estimating Rs 1.86 lakh crore gain to private firms in allocation of coal blocks and said the policy followed was transparent and not faulty.<br /><br />"The policy adopted to allocate coal blocks was not faulty. There could not be a more transparent policy for allocation of coal blocks (since 2004 when no competitive bidding process was present)," coal minister Sriprakash Jaiswal said in New Delhi.<br /><br />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 (Rs 10.7 lakh crore). The 2G scam may have cost the government up to $36 billion (Rs 200,520 crore).<br /><br />The CAG in its report on coal-block allocation named 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.<br /><br />"Delay in introduction of the process of competitive bidding has rendered the existing process beneficial to the private companies. Audit has estimated financial gains to the tune of Rs 1.86 lakh crore likely to accrue to private coal block allottees," CAG said in a report on allocation of coal blocks.<br /><br />The CAG said it has arrived at the estimates based on the average cost of production and average sale price of opencast mines of Coal India in the year 2010-11.<br /><br />"A part of this financial gain could have accrued to the national exchequer by operationalising the decision taken years earlier to introduce competitive bidding for allocation of coal blocks," CAG said.<br /><br />The auditing body said it is "of strong opinion that there is a need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on consumers". <br /><br />Shares in Reliance Power, India's second-largest power producer by market value, tumbled on 17 August after they were mentioned by the CAG reports which were presented in parliament. (<strong>Read: <a href="http://www.businessworld.in/web/guest/storypage?CategoryID=37505&articleId=479466&version=1.0&journalArticleId=479467">Sensex Pares Gains</a></strong>)<br /><br />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.<br /><br />Shares in GMR Infrastructure Ltd, who the auditor said was sold airport land too cheaply, fell sharply.<br /><br /><strong>Airport & Coal</strong><br />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.<br /><br />"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.<br /><br />Reliance Power stock fell more than 6 per cent after the auditor said the company benefited from a government decision allowing the power producer to use surplus coal from its captive block for another project it was not meant for.<br /><br />It said Reliance, controlled by billionaire Anil Ambani, gained Rs 29,000 crore in undue benefit from the government decision.<br /><br />The CAG 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.<br /><br />The Delhi International Airport (DIAL) joint venture of GMR Group, Airports Authority of India, Germany's Fraport and Malaysia Airports Holdings Berhad, has a mandate to develop, operate and maintain the airport for a term of 30 years extendable by another 30 years.<br /><br />GMR Infrastructure's shares fell as much as 4.2 per cent after the report was released.<br /><br /><br /><br /><br /><br /> </div>
