NEW DELHI: Government auditor CAG on Friday said private firms are likely to gain Rs 1.86 lakh crore from coal blocks that were allocated to them on nomination basis instead of competitive bidding, which amounted to the loss to national exchequer.

The CAG in its report, tabled in Parliament, names 25 companies including Essar Power, Hindalco, Tata Steel, Tata Power and Jindal Steel and Power which have got the blocks in various states.

“Delay in introduction of the process of competitive bidding has rendered the existing process beneficial to the private companies. Audit has estimated financial gains to the tune of Rs 1.86 lakh crore likely to accrue to private coal block allottees,” CAG said in a report on allocation of coal blocks.

The CAG said it has arrived at the estimates 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.

The auditing body said it is “of strong opinion that there is a need for strict regulatory and monitoring mechanism to ensure that benefit of cheaper coal is passed on consumers”.

The concept of allocation of captive coal blocks through competitive bidding was announced in 2004. However, government is yet to finalise the modus operandi of competitive bidding.

CIL suffered 116 MT output loss due to delays in projects: CAG

The world’s largest miner Coal India (CIL) suffered production losses to the tune of 116 million tonnes (MT) on account of delays in execution of new projects, government auditor CAG has said.

Delays ranging from “one to 12 years” in execution of 32 projects under different subsidiaries of CIL entailed “loss of production by 115.95 MT,” CAG said in its report on “Allocation of Coal Blocks and Augmentation of Coal Production”.

The delays, it said, pertained to “problems of land acquisition, forest clearance, adverse geo-mining condition, tender finalisation for equipment of and construction of Coal Handling Plant (CHP) and railway siding,” it said.

CAG observed that delays took place despite an expert committee emphasising way back in 2005 the need for setting up of a permanent special task force to monitor progress of clearances and project implementation of schemes to be completed by the end of XIth Five Year Plan (2007-12).

“In order to bridge the demand-supply gap of coal, new coal projects are required to be completed in a time bound manner,” it said.

However, the coal ministry stated in January, 2012 that “response from ministry of environment and forest is awaited.”

Noting that CIL could not match with the rate of increase in coal production due to delays in execution of augmentation of projects on account of “lack of coordinated and planned approach by various government agencies involved in statutory clearances and land execution,” CAG asked CIL to fix output targets in line with the targets by the Planning Commission.

State-run Coal India is the largest domestic producer of dry-fuel and accounts for over 80 per cent of the total domestic production.