Union coal minister Sriprakash Jaiswal on Thursday condemned media reports of the comptroller and auditor general's estimate of losses from allocation of coal blocks saying that the CAG report being cited was "fake". Jaiswal said that competitive bidding had been made mandatory since 2009 to avoid such losses.

He said that the final report of the apex auditor was not available yet and would take another four months in coming. He refused to comment on the Rs 10.7 lakh crore loss figure saying that he will only comment when the final report is out.

The minister, however, responded to queries on the audit of the allocation saying that he and the CAG had held meetings on the allocation of coal blocks.

Jaiswal further stated that the process of allocation had remained the same from 1993 till 2009 when it had been reviewed by the UPA government after the allocation process was felt to be less than transparent.

He said that the earlier process entailed applicants for blocks identifying capacity and location of mines on their own. The revised process had been initiated in 2009 after which adverstisements were put out and applications were duly vetted by the ministry. The identification of coal blocks for allocation was done by a screening committee. The permissions were only granted after consultations between the coal secretary, chief secretaries of states where the blocks were located and secretaries of concerned ministries (power, steel, etc.).

He said that these amendments had been notified because the government felt that there had been irregularities during the term of UPA 1 adding that the ministry had to constitute the committee for identification as Coal India Limited had come under a lot of pressure as demand soared and the supply of coal plummeted.

The auction bidding process was started in 2009, the minister stated, and the the profits were given to the state exchequer.

One hundred and ninety four coal blocks had been allotted to different private and public sector entities in between 1993 and 2009 of which only 28 have been recorded as operative.  The union government, after review, had cancelled 24 allotments from the lot non-operative coal blocks. However, show-cause notices had been issued to the entire lot. The minister clarified that the government started seeking bank guarantees from the allotees whose coal blocks had been non-operative with intent to seize all such blocks.

However, a top coal ministry official who was involved in the meetings between the ministry and the CAG told Governance Now that the allocations had been made to supply fuel for power generation but some allotees were mining the coal for sale. Most of the others, who had also planned to sell the coal they had got, had let the blocks remain non-operative waiting for legislative changes allowing them to do so. The official said that these allocations should have been revoke long before but negligence on the part of the prime minister's office (the prime minister held the portfolio from 2007 to 2009) could contributed to the losses. He added that the allotees had collectively incurred loans from various financial institutions to the tune of Rs 1.3 lakh crore.