India lost up to $210 billion in non-competitive resource sell-off

NEW DELHI—India’s national auditor said the government lost huge sums of money by selling coal fields to private companies without competitive bidding, adding to massive losses from dubious auctions of other state assets.

Three reports by the Comptroller and Auditor General sparked a new storm of criticism of a government that has been floundering under a crush of scams and corruption accusations and has been unable to push through critical economic reforms.

The auditor’s coal field report to Parliament estimated that private companies got a windfall profit of $34 billion because of the low prices they paid for the fields. An earlier draft of the report claimed the government had lost nearly $210 billion from the coal allocations.

It revealed that 142 coal fields were sold since July 2004 to private and state-run companies. Some of the coal fields bought by private companies in 2004 did not begin production till 2011, while some companies later made enormous profits by flipping them.

The report criticized the sales procedure that was followed and said the allocation of coal fields “lacked transparency and objectivity.”

The auditors said the allocations were made on the recommendation of state governments.

Coal Minister Sriprakash Jaiswal defended the government’s strategy of handing out coal fields to companies without resorting to an auction process by saying the policies were suited to the time when they were adopted.

He also disagreed with the CAG’s estimate of losses, saying these were unexplored coal fields.

India has been facing a severe shortage of coal to fuel its power sector. Last month, more than 600 million people in the country went without power for hours after the electricity grid collapsed, plunging northern, eastern and northeastern India into darkness.

Starved of coal supplies, India’s power companies now are looking at importing coal from Indonesia and Australia.