CAG pulls up Chhattisgarh govt for coal block allocation

Last Updated: Friday, August 24, 2012 - 21:17

New Delhi: Even as BJP paralyses Parliament on the allocation of coal blocks by the Centre, its own government in Chhattisgarh had come under attack from CAG for allocating coal blocks at "abnormally low" rates that led to a loss of over Rs 1,052 crore.

The Comptroller and Auditor General (CAG), in its audit report (Civil & Commercial) for 2010-11, had in April pulled up Chhattisgarh Mineral Development Corp Ltd for accepting a single bid for commercial mining of coal from a block allocated by the Centre.

The CAG said that the Centre in July 2007 allocated the Shankarpur coal block comprising Bhatgaon-II and Bhatgaon-II Extension to the Chhattisgarh Mineral Development Corp Ltd.

The company invited bids for commercial mining. It got the highest offer of Rs 552 for mining of per ton of coal from Bhatgaon-II and a single bid of Rs 129.60 per ton for Bhatgaon-II Extension.

"Though the rate obtained for Bhatgaon-II Extension block was abnormally low, the company accepted" them, CAG said adding both the coal blocks were contiguous and the quality of coal available in both of them was similar.
Bhatgaon-II Extension Block contained superior grade coal which is "scarce and highly priced".

"Though the company was aware of all these facts, it accepted the lower rates quoted by the single bidder," it said adding "the evaluation and acceptance of the rate offered in Bhatgaon-II Extension was not in order".

The CAG felt the company should have either extended the tender opening date or re-invited tender to "generate fair competition instead of justifying the low rate quoted by the lone bidder".

"This resulted in potential loss of revenue of Rs 1,052.20 crore," the CAG said.

Though CAG did not mention of the bidder for the
Bhatgaon-II Extension Block, the contract went to SMS Infrastructure Ltd, owned by BJP`s Rajya Sabha MP Ajay S Sancheti, a close aide of party president Nitin Gadkari.

The Chhattisgarh-government owned firm in its response to CAG stated that "a conscious decision was taken to accept the rates offered by the lone bidder in respect of the Extension Block on the basis of the advice from the Coal Advisor since the average grade of coal in the mine was D only as per Mining Plan.

The CAG, however, countered it by saying that "the detailed seam-wise coal reserve in the Mining Plan (prepared according to the Geological Report and approved by the Government of India) indicated that Grade A to C constitute around 55 per cent of the total reserve in the Extension Block".

"Further, in respect of the Bhatgaon II Block also the average grade of coal indicated in the Mining Plan was D only and Grade A to C was also in the similar range and comparable to that of Extension Block," it said.

The official auditor said the opinion of the Coal Advisor, who was a private consultant, was not in accordance with the approved Mining Plan and the Geological Report.

"This does not justify the core issue of getting guaranteed consideration which is abnormally low in case of Bhatgaon II Extension as compared to Bhatgaon II Block," it said adding before floating the tender, the company failed to fix the minimum reserve price based on the quality of coal available in both the mines.

"Superior Grade (A to C) coal being highly priced and scarce in the country, the company could have taken all earnest efforts to allot the mining lease at most competitive rates so as to maximise its revenue and to protect its financial interest," the CAG added.

PTI



First Published: Friday, August 24, 2012 - 21:17

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