PM must introspect and resign: BJP on auditor's coal mine report

The report by the government's auditor - the Comptroller and auditor General or CAG - states that nearly 150 coal fields were allotted to private and state-run firms without transparency and objectivity between 2005 and 2009. 

The report does not indict the Prime Minister or his office, but the opposition is targeting the Prime Minister. The BJP's Sushma Swaraj said, "Manmohan Singh is directly responsible. This time he can't blame someone else." The BJP says this is the biggest of all scams in a UPA reign marked by scams. "UPA's term has been full of scams and each scam is bigger than the previous one," Ms Swaraj added.

The government has objected to the CAG's method of calculation of loss to the exchequer and has defended the way it allotted coal blocks to private firms. Coal Minister Sri Prakash Jaiswal said this was done because Coal India alone could not have met the country's demand for coal. It was necessary to bring in private players to speed industrialisation and development in the country.

The minister also rebutted the CAG report on transparency of process, saying it could not have been more transparent. There was a screening committee with representation from states and end-user ministries, he pointed out. The government says it ensured transparency by placing ads for the coal blocks that were available for allocation.  Companies that responded were evaluated by the screening committee.  The auditor's report states, however, that the committee has not listed how it chose companies.  The CAG report states that allotments were based largely on recommendations from state governments and other ministries.

Mr Jaiswal's colleague and Union Minister of State in the Prime Minister's Office V Narayanasamy said, "The Comptroller and Auditor General is exceeding its mandate." He said that the report will now be studied by Parliament's Public Accounts Committee or PAC, which is headed by the BJP's Murli Manohar Joshi.  "In this government, there are scams in the skies, on the ground, and underground" said Mr Joshi today, referring to the fact that another CAG report has identified financial problems with the privatization of the Delhi international airport.

The government says the auditor has ignored crucial factors in its report on coal - that the cost of extraction of coal varies from mine to mine, for example, and that underground mines yield less coal than others.  

The government says that when the coal fields were allotted, existing laws did not allow for an auction.  Changing policy and administrative processes would have taken several years.  The delay would have hurt a surging economy and industry which needed coal.  But the auditor says that competitive bidding could have been introduced in 2006.

The government may however agree that companies sold some of the coal they mined in the open market which violates the terms of their contract. Others sold their companies at a huge premium after being allotted coal fields.  But ignoring terms and conditions is not a consequence of the method used to allot coal fields, the government will argue, while stressing that offenders will be dealt with firmly.

The auditor has highlighted that the initial output from mines given to private players was lower than estimated.  It has also said that many firms defaulted on basic terms of their contract.  For example, it says that of the 86 captive mining blocks, only 28 started production by March 31, 2011. The government will agree that it may have overestimated how quickly and efficiently the private sector could handle production, and that environmental and other clearances took longer than anticipated in many cases.

Government sources also point out that some states run by opposition parties were opposed to an auction.  Chhattisgarh, West Bengal and Rajasthan felt that an auction would increase the cost of coal and adversely impact development of industry in their areas.