Auditor triple whammy hits govt in Parliament

  • 17/08/2012

  • Indian Express (New Delhi)

Three mega infrastructure investments in power, airports and coal made through government-private sector partnerships were slammed by the national auditor for causing huge losses to the public on Friday. The criticism triggered renewed charges of corruption from the opposition, even as ministers rebutted the arguments hotly. Reports by the Comptroller and Auditor General (CAG) of India on the allocation of 57 coal blocks, the Delhi International Airport and on the award of ultra mega power projects created a political storm as soon as they were tabled in Parliament. The BJP demanded a response from Prime Minister Manmohan Singh, saying the CAG was referring to coal blocks allocated between 2004 and 2006, when Singh was in charge of the coal ministry. The report did not name the PM, but noted that giving out blocks without bidding led to the exchequer losing Rs 1,85,591 crore over the life of the blocks. “This is not just a scam, it’s a case of murder and loot. We would like an answer from the Prime Minister on charges made by the CAG,” BJP spokesperson Rajiv Pratap Rudy said minutes after the report was tabled in Rajya Sabha. Coal Minister Sriprakash Jaiswal said bidding was not chosen as there were conflicting opinions from the law ministry at that time; however, the ministry had adopted a transparent process. Minister of State in the PMO V Narayanasamy accused the auditor of exceeding its brief. “According to me, the CAG is not following its mandate, which... I wish to bring to notice.” The civil aviation ministry said its final points were not included in the report on the Delhi airport. The CAG reports add to the ones issued since 2010 on telecom, oil and gas, and on the preparation for the Commonwealth Games that have rocked Singh’s government repeatedly, and led to a jail term for then telecom minister A Raja. Stocks of most companies named in the CAG reports fell. Reliance Power slipped 5.60 per cent to Rs 87.70, while GMR Infrastructure fell 3.07 per cent to close at Rs 20.55 at the Bombay Stock Exchange. In all the three reports, the CAG has claimed that private companies extracted benefits from the wording of the contracts they made with the government, or got the contracts modified to suit their interests. The CAG has named Tata Steel, Essar Power, JSPL, Hindalco and Adani Power among the clutch of miners who it says benefited from the discretionary allotment of coal blocks. Later in the day, Tata Group chairman Ratan Tata told shareholders at Tata Power’s annual general meeting that “there is a question on coal and land auction which will be the concern, and has to be addressed”. Tata did not mention the CAG report. According to the auditor, in the case of the Sasan ultra mega power project awarded to Reliance Power, the bidding process was vitiated by allowing the company to first claim more blocks than necessary to fire the project, and to then use the surplus to fuel another of its power projects at Chitrangi. This resulted in a financial gain of Rs 11,852 crore to Reliance Power at net present value, the auditor said. In a filing with the BSE, Reliance Power said it had had no role in the allotment of coal reserves to the Sasan project, and that the diversion had been okayed by an Empowered Group of Ministers. On Delhi airport, the auditor said the government had given land with a potential earning capacity of Rs 1,63,557 crore to DIAL whose equity contribution was only Rs 2,450 crore for a lease of 30 years. GMR, the operator of DIAL, said it had not received any undue benefits from the government. “The entire process of the privatisation and selection of joint venture was based on a transparent, international, competitive bidding which was guided and presided over by competent bodies and has been upheld as such by the Supreme Court in 2006,” the company said in a statement. The CAG’s estimate of a windfall gain of Rs 1.86 lakh crore to private companies that were allocated captive coal blocks is substantially less than the figure of Rs 10.67 lakh crore that its original draft reportedly contained. On concerns that repeated critical reports from the CAG had had the effect of stalling government clearances for several projects and contributed to the slowing of economic growth, Deputy CAG A K Patnaik said it was not right to blame the auditor on policy issues. “Let me clarify. Nowhere in the audit reports have we questioned government policy,” Patnaik said.