The coal ministry has said captive coal blocks could not be allocated to private companies at the market price of reserves. This is despite the Comptroller and Auditor General of India (CAG) recently blaming the government for extending “undue gains” worth a whopping Rs 10.6 lakh crore to companies by not allocating the blocks at market prices.
“Since the blocks are allocated to private companies only for captive purposes and specified end-use, the question of linking the blocks to the market price of coal does not arise at all,” the ministry said in a clarification on captive block allocations to private companies between 1993 and 2009.
CAG’s final report on coal block allocation is likely to be tabled in Parliament in the current session. A draft of the report was quoted in a news report published by The Times of India on March 22. It said “undue benefits” were extended to companies through the allotment of 155 coal blocks between 2004 and 2009. Later, in a letter to Prime Minister Manmohan Singh, CAG had downplayed the draft report, saying “the details being brought out were observations under discussion at a very preliminary stage, and do not even constitute our pre-final draft.”
The CAG had arrived at the windfall gain figure by drawing an estimate of the cost of production for each block, taking into account the actual cost of production in a similar Coal India (CIL) mine for the same year. The difference between CIL’s sale price and cost of production was then multiplied by 90 per cent of the reserves in each block.
Coal Minister Sriprakash Jaiswal had said attaching the cost to a block would have raised prices of power, steel and cement.