THE Comptroller and Auditor Generals explosive estimate that the government suffered a loss of Rs 1.86 lakh crore by not going for competitive bidding to allot coal blocks would turn out to be far lower if the auditor had studied and compared the profits made by miners elsewhere in the world. The CAG report tabled in Parliament calculates that the firms which were allotted 57 coal blocks could earn a net profit of Rs 295 per tonne or $5.4 at current exchange rates. However,an analysis by The Indian Express of international mines in which Indian companies have made investments,or even those belonging to foreign firms,have not delivered such profits even though these mines are considered to be far superior to mines in India. For instance,the net profit per tonne of coal mined by Indian companies abroad rarely exceeds $3.5,the figures show. Unlike mines in India,these foreign mines are developed and are ready for extraction or have already been mined in the past. If the CAG had used this as the benchmark for presumptive losses,the amount would have worked out to Rs 1,20,938 crore. According to data accessed by The Indian Express,Indian companies show a net profit per tonne from their foreign mines which is far lower than the CAGs $5.4 assumption. The data shows that Coal India makes a net profit of $4 per tonne from its Tete 1 mine in Mozambique,Tata Power makes $3.8 from PK Kaltim Prima mine in Indonesia,Lanco makes $3 from its Griffin mine,and Adani makes $2.2 from its Tanjung Enim mine. Mines in India,however,are not only unexplored but also have major connectivity problems. If comparable mines abroad - where the net profit is $1 per tonne or even lower - are used to calculate the losses,the CAGs presumptive loss amount would fall to Rs 34,553 crore. The CAG,on the other hand,used an imputed figure derived from the average sale price for all grades of coal produced in India by Coal India. To arrive at the net profit of Rs 295 per tonne,it subtracted the average cost of running the mines,added an element of financing cost to it and arrived at a figure that experts said is almost double the actual net profit. This assumed net profit per tonne was extrapolated to the extractable reserves of coal to arrive at a net presumptive loss of Rs 1.86 lakh crore. This number is also based on the premise that all mines have similar geological patterns and identical mining conditions. However,officials said that this was not the case. Accordingly,the calculations made are not correct. Further there would be faults as other geological constraints and surface features can reduce the mineable reserves, said the Coal Ministrys Chief Adviser Alok Perti.
