CAG Report says that -
1)A whopping gain of Rs 1.86 lakh crore is likely to accrue to private companies, including Tata Steel, Essar Power, JSPL, Hindalco and Adani Power from allocation between 2005 and 2009 of 57 coal blocks without competitive bidding.
2)Delay in introduction of the process of competitive bidding has rendered the existing process beneficial to the private companies.
There was no specific criteria for allocation of coal blocks in the country till 1993. From 1993 onwards, Ministry of Coal started awarding blocks to private parties for captive mining on recommendations of the Inter-Ministerial Screening Committee or through direct allocation.
The concept of allocation of captive coal blocks through competitive bidding was first announced in 2004
However, the government is yet to finalise the modus operandi of the mechanism. In the mean time, 194 coal blocks were allocated to different government and private parties up to March 31, 2011
BJP Demands Resignation of Manmohan Singh who held the Coal Portfolio for 3 years since 2004.Both Houses of Parliament were adjourned on Wednesday Aug 22,2012 for the second consecutive day.
CPI-M leader Sitaram Yechury on Wednesday Aug 22,2012 demanded that the Prime Minister Dr. Manmohan Singh should give a clarification in Parliament over the Comptroller and Auditor General's (CAG) report on coal block allocations
CAG Report is critical of the allocations mainly on 3 counts -
Firstly, it states that the Screening Committee did not follow a transparent and objective method while making recommendations for allocation of coal blocks.
Secondly, it observes that competitive bidding could have been introduced in 2006 by amending the administrative instructions in vogue instead of going through a prolonged legal examination of the issue which delayed the decision making process.
Finally, the report mentions that the delay in introduction of competitive bidding rendered the existing process beneficial to a large number of private companies. According to the assumptions and computations made by the CAG, there is a financial gain of about Rs. 1.86 lakh crore to private parties.
The government on Thursday Aug 23,2012 said it was prepared to discuss threadbare the CAG report on coal block allocation in Parliament and reply to the issues raised by the opposition.
PM Manmohan Singh's Statement on Coal Block Allocation - Monday, Aug 27,2012
PM's statement in Parliament on the Performance Audit Report on Allocation of Coal Blocks and Augmentation of Coal Production states that -
I want to assure Honourable Members that as the Minister in charge, I take full responsibility for the decisions of the Ministry for the coal blocks allocation from 2006 to 2009 and I wish to say that any allegations of impropriety are without basis and unsupported by the facts.
Allocation of coal blocks to private companies for captive use commenced in 1993, after the Coal Mines (Nationalisation) Act, 1973 was amended. This was done with the objective of attracting private investments in specified end uses.
Since 1993, allocation of captive coal blocks was being done on the basis of recommendations made by an inter-Ministerial Screening Committee which also had representatives of State governments.From 1993 onwards, successive governments continued with the policy of allocation of coal blocks for captive use and did not treat such allocations as a revenue generating activity.
The idea of introducing auction was conceived for the first time by the UPA Government in the wake of increasing demand for captive blocks. Action was initiated to examine the idea in all its dimensions and the process culminated in Parliament approving the necessary legislative amendments in 2010
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