Competitive bidding could have saved Rs 1.86 lakh cr: CAG

New Delhi: Rapping the government for its failure to timely implement the competitive bidding mechanism for allocation of coal blocks, CAG on Friday said part of the Rs 1.86 lakh crore loss could have been partially tapped had the procedure been put in place earlier.

In its report, tabled in Parliament, CAG said 25 firms including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power were benefited to the tune of Rs 1.86 lakh crore from coal blocks allocated to them on nomination basis, instead of competitive bidding.

"The government could have tapped a part of this financial benefit by expediting decision on competitive bidding for allocation of coal blocks," CAG said in the report.

CAG said it has arrived at the estimated loss to the national exchequer based on the average cost of production and average sale price of opencast mines of Coal India in the year 2010-11.

"A part of this financial gain could have accrued to the national exchequer by operationalising the decision taken years earlier to introduce competitive bidding for allocation of coal blocks," CAG said.

There was no specific criteria for allocation of coal blocks in the country till 1993. From 1993 onwards, Ministry of Coal started awarding blocks to private parties for captive mining on recommendations of the Inter-Ministerial Screening Committee or through direct allocation.

The concept of allocation of captive coal blocks through competitive bidding was first announced in 2004. However, the government is yet to finalise the modus operandi of the mechanism. In the mean time, 194 coal blocks were allocated to different government and private parties up to March 31, 2011.

To bring objectivity and transparency in the allocation and for tapping of a part of benefit for accruing to the allottees of captive coal blocks, CAG said the Coal Ministry should "urgently" work out modalities to implement the procedure of allocation of coal blocks for captive mining through competitive bidding.