CAG reports slam UPA government, BJP demands PM's resignation

New Delhi, August 17: Three key CAG reports were tabled in Parliament on Friday indicting the government of causing a combined loss of crores of rupees to the national exchequer.

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.

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 to the tune of over Rs 3,415 crore.

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.

Reacting to the CAG reports, minister of state in Prime Minister's office V Narayanasamy said that the govt auditor was not following its mandate.

Meanwhile, the BJP demanded resignation of the government alleging that scams in the coal, power and airport sectors had exposed the "loot and plunder" of the country. "

The party sought Prime Minister's resignation as he headed the coal ministry at the time of alleged irregularities.

Government is badly exposed by the three CAG reports on power, coal and Delhi airport. The magnitude of these scams, according to the CAG report, is between Rs 1.6 and 1.86 lakh crore," BJP spokesperson Prakash Javadekar told reporters outside Parliament.

CAG's coal report

The CAG in its report, tabled in Parliament, names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.

"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. 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.

"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.

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".

The concept of allocation of captive coal blocks through competitive bidding was announced in 2004. However, government is yet to finalise the modus operandi of competitive bidding.

CIL suffered 116 MT output loss due to delays in projects: CAG

The world's largest miner Coal India (CIL) suffered production losses to the tune of 116 million tonnes (MT) on account of delays in execution of new projects, government auditor CAG has said.

Delays ranging from "one to 12 years" in execution of 32 projects under different subsidiaries of CIL entailed "loss of production by 115.95 MT," CAG said in its report on "Allocation of Coal Blocks and Augmentation of Coal Production".

The delays, it said, pertained to "problems of land acquisition, forest clearance, adverse geo-mining condition, tender finalisation for equipment of and construction of Coal Handling Plant (CHP) and railway siding," it said.

CAG observed that delays took place despite an expert committee emphasising way back in 2005 the need for setting up of a permanent special task force to monitor progress of clearances and project implementation of schemes to be completed by the end of XIth Five Year Plan (2007-12).

"In order to bridge the demand-supply gap of coal, new coal projects are required to be completed in a time bound manner," it said.

However, the coal ministry stated in January, 2012 that "response from ministry of environment and forest is awaited."

Noting that CIL could not match with the rate of increase in coal production due to delays in execution of augmentation of projects on account of "lack of coordinated and planned approach by various government agencies involved in statutory clearances and land execution," CAG asked CIL to fix output targets in line with the targets by the Planning Commission.

State-run Coal India is the largest domestic producer of dry-fuel and accounts for over 80 per cent of the total domestic production.

CAG's report on Delhi airport

CAG in its audit report on Indira Gandhi International Airport that was tabled in Parliament, said DIAL can potentially earn Rs 1,63,557 crore over a 60-year period from the land given to it on a lease of Rs 100 per annum.

Allowing DIAL to levy development fee vitiated the sanctity of bidding process and led to undue benefit of Rs 3,415.35 crore to the private firm, it said.

GMR Infrastructure holds 54 per cent stake in Delhi International Airport Ltd (DIAL).

"It was noticed that ministry of civil aviation and Airport Authority of India, on some occasions, violated the provisions of the transaction documents in the interest of the concessionaire," the official auditor said.

CAG said contrary to provision of the airport concession agreement, DIAL was allowed to use the amount collected as development fees to meet the project costs.

"In face, only 19 per cent of the project cost came from equity, approximately 42 per cent came from debt. The remaining project costs were met from security deposits and development fees".

"Whenever DIAL raised an issue regarding revenue to accrue to it or expenditure to be debited to government in contravention to the provisions of Operation Management Development Agreement (OMDA), the ministry and AAI interpreted the provisions always in favour of the operators and against the interest of the government," it said.

CAG report on Reliance Power

Flaying post-bid concessions to Reliance Power, the CAG has said 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.

CAG in its report tabled in Parliament said subsequent to award of the 4,000 MW Sasan ultra mega power project to RPL, the government granted permission to the company to utilise the surplus coal from three mines attached to the projects for the group's Chitrangi project in Madhya Pradesh.

"A reading of all the clauses in the allocation letters together conveyed that clauses were inserted in the coal allocation letter as a safegaurd measure to prevent misuse of coal by the developer. The permission to use surplus coal in other projects of the bidder after award of the contract based on acceptance of the lowest tariff, vitiated the sanctity of the bidding process which would result in post bid concessions to the developer having significant financial implication," it said.

CAG said the permission to use of excess coal from Moher, Moher Amlohri and Chhatrasal blocks allocated to RPL's Sasan power project after its award "not only vitiated the bidding process but also resulted in undue benefit to RPL".

"This decision resulted in financial benefit of Rs 29,033 crore with a net present value of Rs 11,852 crore to the project developer (RPL)," the official auditor said.

CAG said it was not clear how power ministry in October 2006 came to the conclusion that two initially allocated blocks for the Sasan project (Moher and Moher Amlohri) would be inadequate to fire the 4,000 MW plant.

"The basis on which ministry of coal was prevailed upon in October 2006 itself to allot an additional block (Chhatrasal) of coal to Sasan ultra mega power project by de-allocating it from the public sector NTPC is not clear," it said.