Costly Coal-ition

The UPA government’s roll call of scams now brims over, after CAG on Friday pulled the lid off rampant corruption in coal block allocation, ultra mega power projects and underpricing in land allotments for the Delhi airport.

From CAG’s total estimated losses of Rs 2.18 lakh crore to the national exchequer in these cases, one can extrapolate the immense clout of the politician-babu-corporate nexus, overshadowing every basic tenet of ethics and fairplay. While the coal ministry’s allocation of 39 coal blocks till June 2004 was notorious for its lack of transparency or objectivity, the subsequent allocations of 71 more blocks till September 2006 were on similar lines. The entire exercise, according to CAG, will cost the national exchequer  Rs 1.86 lakh crore, which it says private companies are likely to gain because coal blocks were given to them without opting for a competitive bidding process.

The coal scam was a tragedy waiting to happen, for state governments have hitherto enjoyed more than their fair share of influence in coal block allocation through favourable recommendations. Bidding is presently followed only for crude oil and gas and coal bed methane. An amendment introducing competitive bidding for coal blocks was proposed in 2004 during the UPA’s first tenure, but it was not passed until 2006 when all the arbitrary allotments had been made. The Opposition is pointing fingers at prime minister Manmohan Singh as the coal ministry was directly under him between 2004 and 2006 and there are documents to show that the Prime Minister’s Office consistently stonewalled the then coal secretary’s proposal to adopt competitive bidding. The CAG has now calculated that from all three scams, the potential loss is Rs 2.18 lakh crore as compared to Rs 1.76 lakh crore which the CAG had estimated as the cost of the fraudulent 2G spectrum allocation process.

There are also apprehensions that the companies have been selling off the allotted blocks. These rumours have gained strength as mining hascommenced only in a handful of the total blocks allotted. While a private company has said that “national interest in augmenting coal production” was not factored in the CAG report, others have sought refuge in technicalities and half-truths. While rubbishing the report as a “draft” the government has accused the CAG of “not following the mandate.” But none has denied the lack of transparency in the whole process. The question before the naysayers and the UPA government now will be whether to bite the bullet before worried investors jump the gun.

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