“Largesse to coal firms yet another UPA scam”

The CAG is at it again.About 16 months after it rocked the UPA government with its explosive report on allocation of 2G spectrum and licences,the Comptroller & Auditor Generals draft report titled Performance Audit Of Coal Block Allocations says the government has extended undue benefits,totaling a mind-boggling Rs 10.67 lakh crore to commercial entities by giving them 155 coal acreages without auction between 2004 and 2009.The beneficiaries include some 100 private companies,as well as some public sector units,in industries such as power,steel and cement.
The CAG  estimated loss figure of Rs 10.67 lakh crore at March 31,2011 prices is six times that of its highest presumptive loss figure of Rs1.76 lakh crore for the 2G scam.This,it says,is actually a conservative estimate,since it takes into account prices for the lowest grade of coal and not the median grade.CAG says even if the price levels prevailing at the time of allocations were to be taken,the estimate of loss would be over Rs 6.31 lakh crore.
Here’s how the auditor has calculated the windfall gains.First,an estimate of the cost of production for each block was arrived at by taking into account the actual cost of production in a similar Coal India mine for the same year.Then the difference between CILs sale price and cost of production was multiplied by 90% of the reserves in each block.The figure thus obtained was the windfall gain for that block.