Reiterating its charge of irregularity and lack of transparency on the part of the government, the Comptroller and Auditor General has told Parliament’s Public Accounts Committee that the government betrayed its stated purpose of dramatically increased power generation in the allocation and augmentation of coal blocks.

The PAC is expected to look into these issues on Friday. The CAG’s vetting reply to the House panel said that estimated financial gains to private parties in respect of 57 open cast/mixed mines as on March 31st 2011 works out to INR 1,85,591.34 crore on the conservative side.

The government insists that power generation had greater priority than revenue generation but the CAG is unsatisfied with the answer.

CAG said that “The reply of the coal ministry does not answer the issue that majority of the coal blocks i.e., 61 coal blocks, were allocated to private parties operating in iron, steel and cement, which is a deregulated sector whereas the number of blocks allocated to power sector private operators were less than 50 per cent of the blocks allocated to iron and cement sector components.”

The PAC has asked the Coal Ministry why it did not evolve any mechanism to check whether private players and owners of coal blocks were sourcing coal from CIL) as well. It has asked the ministry to inform whether any specific monitoring mechanism has been introduced to ensure that terms and conditions of coal block usage are adhered to.

The PAC also wants to know from the government as to why it kept on allocating coal via a screening committee when it knew that the procedure’s legality was under question.

The CAG in its vetting remarks to the PAC also says that the Ministry of Coal did nothing to prevent profiteering by private players.

It said that “The fact remains that coal ministry while allocating coal blocks did not ensure that the allocation should not result in profiteering by way of transfer of shares of the company. There should have been at least a provision in the allotment letter that any change in the ownership pattern of the company should be with express prior permission of the ministry.”

The CAG insists that the minutes of the 35th screening committee produced to audit by the Coal Ministry do not indicate whether applications were evaluated in a transparent manner.

It added that “It is thus not possible to ascertain from the minutes that an objective evaluation of applicants was carried out before recommending allocations.”