Kirit Parikh lambasts CAG's Rs 1.86 lakh crore loss figure in Coalgate

Says controversy over coalgate triggered by CAG report to be clamed for dwindling coal production in the country

Former Planning Commission member Kirit Parikh, the government's key energy policy advisor, has lambasted the Comptroller and Auditor General of India (CAG) for its controversial calculation of Rs 1.86 lakh crore loss to the exchequer in the alleged coal allocation scam and said corporates must be allowed “efficiency gains” that might accrue from low production cost in captive mines.

 

“The CAG was mistaken. He followed the wrong argument. Coal was given to captive users to produce power in a competitive market. The only gain one could get from this would be if your cost of production is lower than the cost of production of CIL. And even in that case, if a company has been able to manage the efficiency to do that, that efficiency gain should be allowed," Parikh said in his speech at a power sector event. 

 

The CAG's estimate of “notional loss”, stated in its audit report on coal allocation submitted to Parliament on 22 August 2012, had raised a storm of controversy nationally with opposition parties demanding the government's resignation over alleged favors extended to corporates in allocation of 218 blocks with reserves exceeding 49 billion tonne (BT) over the past decade.

 

Parikh said the controversy over "coalgate", triggered by the CAG’s report, is to be blamed for the dwindling coal production in the country. "The figure of excess gain projected by the CAG was completely out of any rational and economic calculus one can make," the brain behind India's Integrated Energy Policy said. He, however, added that there was still some logic in opting for competitive bidding for allocation of blocks.

 

The Central Bureau of Investigation (CBI) is currently probing allegations of irregularity in coal allocations by the government as part of a Supreme Court-monitored enquiry. The investigative body has so far registered 14 FIRs as part of the enquiry. The coal ministry too has cancelled allocations of 51 blocks where production has been delayed.