CAG takes a dig at OMC for Rs 35 crore washout

Published: 25th March 2013 12:02 PM  |   Last Updated: 25th March 2013 12:02 PM   |  A+A-

The Comptroller and Auditor General has rapped the State-run Odisha Mining Corporation (OMC) for incurring a loss of Rs 35 cr due to sheer negligence. Iron ore stocks of 2.5 lakh tonnes, valued at Rs 35 cr, were washed out by rain water due to lack of retaining wall and garland drains.

 Though OMC was issued several notices by the Indian Bureau of Mines (IBM) for this violation from 2007 to 2011, the State PSU did nothing. Records of the company revealed that 2.5 lakh tonnes of iron ore was washed out from the yards of Kurmitar and Gandhamardan iron ore mines due to heavy rains from   July to September in 2011.

 The company, having iron ore mining leases over an area of 1,212.47 hectares and 1,590.86 hectares at  Kurmitar and Gandhamardan areas respectively, has been carrying out mining operations. As per the Mineral Conservation and Development Rules, 1988, mining operation should be carried out in accordance with the approved mining plans.

 Apart from the mining plan, the stipulations of the Ministry of Environment and Forests and the Odisha State Pollution Control Board also emphasised construction of retaining wall, garland drains and settling tanks of appropriate size to arrest sliding down of excavated minerals by rain water.

 “The inaction of the company to adhere to the statutory requirements and directives of different authorities resulted in degradation of environment with a consequential loss of iron ore worth `34.45 cr,” the CAG report said, adding that this will attract penal provisions for violation of MCD rules.

 In its reply to the CAG in October 2012, the OMC management said it has initiated protective measures and taken steps to recover washed out materials. Since the iron ore fines were washed out in  inaccessible areas, the recovery was not feasible.

 The CAG has further pointed out that the company sustained a loss of over Rs 36 crore due to sale of iron ore fines without segregation of grades and at a  price fixed by the IBM. The company produces two grades of iron ore __ 60-62 per cent Fe content (lower grade) and 62-64 per cent (higher grade). The IBM determines the monthly average sales price for different grade of iron ore fines.

 The CAG detected a short realisation of `36.25 cr in the sale of 4.93 lakh tonnes of higher grade iron ore of Daitary Mines at a rate lower than the IBM price.  The OMC explanation was not acceptable to the CAG as the company failed to safeguard its financial interest by segregating different grades and selling at the IBM price.

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