“I am always open to criticism…rather I welcome it, provided the criticism is based on facts,” the power, coal, mines and RE minister, Piyush Goyal has often been heard saying.
According to government officials, the fundamental objective of any audit is to see whether any existing provision or any guideline has been violated and if this has happened, than what is the consequential financial loss to the exchequer.
The first point that the CAG has raised is that there is a loss of Rs 381.83 crore in valuation of coal mines. It’s logical when the ministry contests this observation with a simple reasoning that if there is an open auction, how does the valuation by MoC matters. “Anyone who will come and bid will do his own evaluation and compete and get the mine…so we fail to understand that how does the valuation of MoC matters,” questioned an official, adding that the conclusion have been made based on limited conceptual understanding of the process.
The second loss/notional loss as per the auditor is of Rs 1000 crore where they say that the valuation of mine was don on the basis of regular coal and not washed coal.
CAG has contended that washed coal should have been used for valuation as it is provided for in the mining plan. However, the ministry contests that in the decision of the Cabinet Committee of Economic Affairs (CCEA), no distinction was made between washed coal and normal coal.
“The CCEA had clearly stated that the notified price of Coal India shall be used for valuation of coal blocks…the notified price is of raw coal or unwashed coal…the violations would have come in case any other price was used other than the one notified for valuation, so where is the violation?, asked the official.
Surprisingly, the notified price of Coal India which is applicable to all consumers for this particular grade of washed coal has not been used by the CAG for the valuation purposes.
Sources revealed that CAG stance has been that the MoC could have gone back to the CCEA, treated this as washed coal, re-evaluated it and then used it.
Interestingly, MoC said that even if it had gone back to CCEA, the value would not have been what the CAG has indicated because there way of determining the value is that they have taken the price negotiated between two PSUs (Coal India and SAIL)..… It is like contenting that a bottle of water which has an MRP of Rs 20 should be valued at Rs 50 because two companies have come to an agreement to buy and sell it at Rs 50.
“Can you determine the value based on a negotiated price or should the market price should be the real price…and the market price can emerge only through an auction process, which is what exactly the MoC did..,” the official added.
Stating that this loss of Rs 1000 plus crore is incorrect, government sources said that even if they had taken it as washed coal, the calculations that they have done are wrong. “When you wash coal, the value of the wasked coal goes up but the volume comes down, so you cannot take the original volume for the purpose of calculations’…But CAG has not done that and has taken fixed volume.”
“So this is a case where someone who does not understand how coal ministry functions, calculates on their own on a notionally determined price and say there is a loss…even for the sake of argument, if I accept all what CAG has said, ultimately the companies who are going to bid and if they are going to use it as washed coal, how does it matter that we put a value to it…it is the company that is bidding whose valuation will matter.”’
Currently, Writing a Book for Penguin India Titled Greased Pole:How Politics and Lobbying Stifled India’s Energy Dreams. The author can be reached on email@example.com (9810661825)
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