CAG slams Coal India for incurring avoidable expenditure

Due to non-deployment of pay loaders, South Eastern Coalfields Ltd (SECL) failed to utilise gainfully the existing crushing facilities

Pulling up the Coal India management this time, auditing agency CAG today said it could have saved at least Rs 20 crore for the state-run firm had it initiated prudent action against avoidable expenditure.

The CAG report, tabled in parliament today, said due to non-deployment of pay loaders, South Eastern Coalfields Ltd (SECL), a CIL subsidiary, failed to utilise gainfully the existing crushing facilities and to earn an additional revenue of Rs 12.76 crore during June 2010 and May 2011.

"Western Coalfileds Ltd incurred an avoidable expenditure of Rs 7.62 crore during 2007-08 to 2010-11 on purchase of electricity from two electricity boards at industrial and non- industrial rates instead of availing cheaper domestic rate for domestic consumption of electricity," CAG said in its report.

Western Coalfileds Ltd is also a subsidiary of CIl, the world's largest coal miner.

An earlier CAG report alleging undue benefits to the tune of Rs 1.86 lakh crore to private firms due to allocation of coal blocks sans auction has raised a storm and paralysed Parliament proceedings for the tenth day today.

CAG said, during June 2010 to May 2011, SECL despatched 6.5 million tonnes coal of below 100 mm size, produced by surface miner at Dipka Open Cast Mine. Generally, such coal are sent through pay loaders and due to their non-availability feeder breakers were used.

"As a result, crushing capacity of the feeder breakers could not be utilised for crushing over-sized coal to below 100 mm size. In the process, the company lost the opportunity to earn an additional revenue of Rs 12.76 crore," CAG said.

The agency said Coal Ministry in its reply said though the tendering and procurement of pay loaders was initiated by the company, but due to lack of response, tenders could not be finalised.

CAG, however, found that argument not "tenable" saying the management initiated the process only in December 2010 whereas the requirement of six pay loaders was envisaged as early as in March 2005.

"Thus the fact remains that though the surface miners were deployed in June 2010, action for hiring pay loaders required for loading the coal mined by the surface miners was initiated in December 2010," CAG said.

On the avoidable expenditure at the Western Coalfields, it said in Pench and Kanhan areas of Madhya Pradesh, Western Coalfields did not have any separate metering agreement for residential colony consumption and was availing electricity at higher tariff applicable for industrial areas.

"Thus, due to non-convention of residential connections from industrial to domestic, the company has failed to avail lower electricity tariff applicable for domestic consumption and thus incurred an avoidable expenditure of Rs 7.62 crore during 2007-08 to 2010-11," CAG said.