India Inc hauled over coal; govt prepares counter-attack

NEW DELHI: The national auditor has rattled India Inc and the government with scathing reports naming top business houses such as the Tatas and Jindals and the Anil Ambani Group among alleged recipients of state generosity, including free coal mines, that resulted in benefits that could add up to a mind-boggling Rs 3.8 lakh crore.

The government, nervous about the fact that some blocks were given away when Prime Minister Manmohan Singh held the coal portfolio, responded aggressively and sought to rubbish the calculations of the Comptroller and Auditor General (CAG). BJP demanded Singh's resignation saying he was morally responsible for the alleged scams, the magnitude of which was almost double the supposed loss to the exchequer as a result of the telecom scam.

CAG said the government's move to allocate coal blocks free to the Tatas, Jindals, Essar, and many other companies resulted in gains of an estimated Rs 1.86 lakh crore, based on the price of the entire quantity of coal that can be mined from these blocks over their lifetime. It said the blocks could have been auctioned six years ago, and the delay has caused a loss to the exchequer.

In a separate report, the auditor said Reliance Power would gain an estimated Rs 29,000 crore over two decades by diverting surplus coal from its Sasan ultra mega power project to another plant that would sell electricity at higher rates. CAG said to be eligible to bid for UMPPs, a company should have implemented projects worth Rs 3,000 crore in the last 10 years, including one project of more than Rs 500 crore. However, it estimated that out of investments of Rs 4,416 crore claimed by Reliance Power while bidding for the Sasan project, only Rs 1,292 crore was "admissible experience" while the rest "may not conform to the stipulated qualifying requirements".

Reliance Power vehemently denied any wrongdoing at the Sasan project it won after a competitive bid, but the company's shares lost 5.6%. Shares of companies that were named as recipients of coal blocks also fell. Tata Power lost 3.7%, Adani Power fell 3.3% while JSPL shed 4% of its market value.

A third report, which analysed the privatisation of the Delhi airport, said the process was "more skewed in the favour of the concessionaire".

CAG came to this conclusion on the ground that land was made available for commercial development without charging market rates. "With an equity contribution of Rs 2,450 crore, of which the private consortium's share was Rs 1,813 crore, DIAL has got a brownfield airport for 60 years, and in addition, commercial rights of land valued at Rs 24,000 crore with a potential earning capacity, according to its own estimates, of Rs 1,63,557 crore."

Rebutting the auditor's findings, DIAL in a late evening communique said: "The entire commercial land available with DIAL neither has any immediate commercial value nor can be put to use and, therefore, cannot be monetised immediately."

Thus, just using value of one acre and extrapolating the same for the entire land parcel is at best an arithmetic exercise and not practical," DIAL added. Questioning CAG's methodology, the statement argued: "In fact, using the same method of calculation, AAI will receive Rs. 3-4 lakh crore from DIAL as revenue share over the 54 years."

The GMR statement also pointed out that the concession of 60 years was part of the bidding documents. "It created a level playing field with no preference to any single bidder and was factored in by all the bidders," a GMR spokesperson said.

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Source: http://economictimes.feedsportal.com/fy/8av2Fvy0dA2J72xs/story01.htm

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