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Indian Prime Minister Manmohan Singh. — Photo by AFP/File

NEW DELHI: Indian investigators believe 12 firms were given “undue favours” by the government when it let them mine coal without making them bid for the rights, a newspaper report said Monday.

An official from the Central Bureau of Investigation (CBI) told the Mint newspaper that a probe ordered by the country's anti-graft watchdog found the dozen companies were given coal deposits without good reason.

“These companies did not meet requisite criteria to get coal and (it) appears that they were given undue favours,” the official said.

The official said preliminary investigations were expected to be completed by the end of August.

The probe was launched after the Times of India revealed a draft report by the national auditor saying the government lost $210 billion in revenues by awarding 155 coalfields to firms without inviting competitive bids.

The auditor's final report on the allocation of coalfields, initially scheduled to be presented in parliament in May, was put on hold until the monsoon session, which will begin on Thursday.

Coal Minister Sriprakash Jaiswal has said India will scrap its current allocation system and begin to hold open auctions later this year after finalising the guidelines for the process.

The national auditor's reports detailing treasury losses due to alleged graft have caused major scandals for the Congress-led government in recent years.

In one case the auditor said the mis-selling of mobile phone licences to favour some firms in 2008 cost the treasury up to $39 billion.

Phone licences issued under the sale have since been revoked by the Supreme Court, casting a cloud on the country's previously heralded telecom sector.