CAG to haul UPA II over coals

Already faced with flurry of protests from civil society on issues of corruption, bribery and black money, UPA II will come under further indictment once Comptroller and Auditor General of India places three reports in the Parliament. The government was expected to place the CAG reports on Thursdady. However, due to the death of Union science and technology minister Vilasrao Deshmukh, both houses of Parliament were adjourned for the day.

These include implementation of Public Private Partnership; IGI Airport that focuses on GMR Delhi Airport deal, second will highlight working of Ultra Mega Power Projects (UMPP) under Special Purpose Vehicles and third is on allocation of coal blocks and augmentation of coal production.

Even though these reports could indict the UPA II in some way or the other, it is the CAG report on coal auction that would prove most embarrassing and damaging for the government and Prime Minister Manmohan Singh too.

Reasons are obvious.

Firstly, the report will become a political hot potato to handle for the government and the Congress party as it involves the Prime Minister's Office. Prime Minister Manmohan Singh was in charge of coal ministry from 2006 to 2009. The allegation is that government opted for non-transparent allocation processes and failed to follow the rules. A few firms were chosen for allocation of coal blocks.

Secondly,the final draft of CAG pegged the losses to exchequer to Rs 1.86 lakh crore. This is bigger speculation than 2-G Scam. The loss incurred by exchequer on account of 2-G Scam was around Rs 1.76 lakh crore.

Interestingly, the leaked draft had accused the government of extending "undue benefits" totalling Rs 10.6 lakh crore. However, the losses were scaled down after the Prime Minister's office intervened.

Thirdly, equally important is the defence from PMO that request from stakeholders i.e. - State Governments like Jharkhand, Chattisgarh (Opposition ruled states) wanted urgent requirement of coal to salvage the poor power situation. So the bidding process according to PMO would have been time consuming and lengthy.

Fourthly, it is alleged that as many as 149 blocks were allotted to several private companies during 2004-2006. Of these 15 blocks that were given to private players did not start production till 2011.  Some of them sold off the blocks at astronomical prices. The coal ministry had last year cancelled 24 allocations for delays in development and is currently issuing show-cause notices to 58 companies,threatening cancellation of allotments.

Fifthly, CAG report has named Tata, Naveen Jindal, Essar, Abhijeet, Arcelor and Vedanta groups as the beneficiaries of this non transparent and flawed allocation. The Tatas and Jindals are alleged to be the biggest beneficiaries.

Sixthly, the Central Bureau of Investigation focussing on the MoUs signed between the states and the private companies. The investigating agency is likely to focus on coal-rich states of Odisha, Chhattisgarh, West Bengal and Jharkhand.  The CBI is trying to ascertain whether these companies were recommended by the state governments as per the norms and parameters or there was a violation.

As  UPA II battles out allegations of irregularities, former coal secretary P C Parekh (2004-05) a few weeks back in media interviews had said that corruption in the allocation of coal blocks cannot be ruled out.