The Comptroller and Auditor General (CAG) has started a review of the Modi government’s recent e-auction of coal blocks, which has fetched over Rs 2 lakh crore from 33 mines.
These are part of the 155 coal blocks which were allotted by the UPA government without auction between 2004 and 2009. The federal auditor had smelt a scam and had observed (in a report in 2012) that the non-transparent manner in which these mines were allocated resulted in “undue benefit” of over Rs 1.86 crore to private companies. The Supreme Court last year cancelled these allocations, validating CAG’s findings and a subsequent CBI probe.
The CAG audit on the e-auction of these blocks by the NDA government began in the first week of May and is likely to be completed before the winter session of Parliament.
The auditor has already sought all documents related to auctions from the coal ministry. This includes details on procedure and systems followed, the base price fixed by the government for each block and the bidding price of companies.
The auditor is looking at whether the base price fixed for each block was right or was it below the benchmark, and if allowing multiple group companies to bid for the same block adhered to the transparency guidelines.
After three rounds of e-auctions, during which 28 blocks were allocated and the remaining were awarded to public sector undertakings, the government is looking at barring multiple bids for a block by a corporate house through its group companies.
TOI had reported on May 18 how the rethink on multiple bids was “aimed at curtailing the probability of price rigging or cartelization that the ministry believes led to wide variation in the winning bids, described as ‘outliers’ for blocks”.
The suspicion of price rigging also led the government to reject the winning bid of a Naveen Jindal group firm for Gare Palma IV/2&3 blocks.
TOI had quoted coal minister Piyush Goyal as saying, “Yes, I am thinking of limiting one group to one bid in one auction. Or, if they put in multiple bids at the time of shortlisting, only one of their lowest bids will be considered and the rest will be eliminated.”
In the last round of auctions, the Vedanta group through its various companies put in 25 bids for 14 out of 23 producing blocks. Similarly, the Aditya Birla group put in 15 bids for eight blocks, and Jindal Steel and Power put in 13 bids for six blocks. Jindal was the worst hit when the Supreme Court cancelled allocation of UPA-allocated coal blocks in September last year.