Understanding the loss - 1.86 lakh crores

16. When did the Government introduce competitive bidding?
The government introduced auction of coal blocks as an option in September 2010, by
passing the MMDR (Amendment) Act 2010 - 6 years after the policy was originally conceived
of. It took the government until February 2012 to notify rules under this Act. There has been
no auction of coal blocks until now.

17. Have there been any allocations made through competitive bidding since 2010?
No, there have been no allocations made via auctions, though the relevant Act was passed
in 2010. The government has also failed to notify any guidelines for the auctioning of coal
blocks.


Understanding the loss - 1.86 lakh crores
The UPA government has seen it fit to accuse the CAG of manipulating numbers for the
sake of publicity. This government made the same accusation during the 2G scam - but with
the base price of the auction set at Rs. 14,000Cr, they have definitely been proven wrong.
The sum of Rs. 1,85,581.34 Cr is more likely to be conservative than exaggerated and the
following reasons explain why -
● Out of 75 private allottees, 57 were allotted Opencast/Mixed mines, with the rest being
Underground mines (UG). Though UG mines are rich with superior grade minerals compared
to Opencast/Mixed mines, CAG left the UG mines out of the calculation as they
require advanced technology (which private players might have an advantage over).
● Blocks allotted to private parties who are in joint ventures with PSUs, and those allotted
to Ultra Mega Power Projects were left out of the CAG's calculation.
● In estimating the Geological Reserves available in the coal blocks, the CAG has relied on
the Ministry of Coal's Mining Plans, where available. In other instances, the CAG has
used the figures of 73% for Open Cast and 37% for Mixed mines as against the Coal
Ministry's own estimates of 75-80% for the Open Cast and 45-60% for Mixed mines.
● In choosing the average sale price to estimate the financial gain, the CAG chose the lowest
option - i.e. the CIL's sale price, instead of choosing e-auction or import prices.
Further, in addition to CIL's cost price, the CAG also deducted financing cost that CIL
receives from the sale price before arriving at the financial benefit.
● In Madhya Pradesh, Underground Mines, which weren't even included into the calculation
by the CAG, were sold for Rs. 700-2,100 per tonne. The CAG used an estimate of
Rs.295 per tonne.
This government is clearly desperate in its need to find defend itself. But challenging the
loss estimated by the CAG only serves to make the UPA government look foolish. If anything,
the number should be higher. As in the case of 2G spectrum, time will reveal the truth.