Audit: India Lost Billions in Awarding of Coal Mining Contracts

Posted August 17th, 2012 at 8:45 am (UTC-5)
Leave a comment

India's national auditor says the government has lost billions of dollars by awarding mining contracts to private companies without competitive bidding, in the latest scandal to hit the country's ruling coalition.

The report released Friday by India's Comptroller and Auditor General (CAG) estimated that private companies that were allocated coal blocks have seen more than $33 billion in financial gains since July of 2004 — money that could have been “accrued to the national exchequer.”

CAG said 142 coal fields were sold to private and state-run companies in a process that “lacked transparency and objectivity.”

The audit is the latest scandal to hit the Congress Party-led government. In 2010, auditors said the government lost up to $40 billion because mobile phone licenses were sold at cut-rate prices to the benefit of a few companies. A former telecom minister and more than a dozen other defendants are accused in the corruption scandal.

There were also allegations of widespread graft during the 2010 Commonwealth Games, which were hosted by India.

On Friday, members of India's main opposition Bharatiya Janata Party were quick to criticize Prime Minister Manmohan Singh and his government on the coal mining audit. Mr. Singh was head of the coal ministry in 2004.

India's current coal minister, Sriprakash Jaiswal, hit back, saying the government does not agree with the audit's findings. He and other ministers argued that officials followed procedures and policies that were in place at the coal ministry in 2004, and that a system of competitive bidding was not in place at the time.

Despite having the world's fourth largest coal reserves, India suffers from coal shortages, further contributing to power outages across the country. Last month, a massive blackout left more than 600 million people without electricity across India.