Congress upset at Orissa government deals

The agreement between the state owned Orissa Mining Corporation (OMC) and Vedanta Alumina, a subsidiary of Sterlite Industries Ltd, for mining of bauxite at Lanjigarh in Kalahandi district, has come in for criticism.

Vedanta Alumina is setting up a 1.4 million tonne alumina refinery in the Kalahandi district at an estimated cost of Rs 4,000 crore.

For sourcing of raw material for this plant, the company has entered into a joint venture agreement with OMC for mining of bauxite.

In the joint venture, Vedanta Alumina has 74 per cent stake while OMC's share is 26 per cent.

Vedanta Alumina will lift bauxite from the Lanjigarh mines at a price which comprises the production cost plus the royalty and the agency fee to be paid by the company.

Vedanta will pay royalty at the rate of Rs 46 per tonne to the government, but the agency fee payable to OMC was Rs 23 per tonne.

The Lanjigarh mines have a deposit of 125 million tonnes of bauxite valued at Rs 80,000 crore.

This determined price was lower than the current market price of bauxite, according to Srikant Jena, former Union minister and a Congress leader.

OMC will lose Rs 500 per tonne in this deal, he added.

The agreement with Vedanta Alumina was not done through a tender by OMC for the process of selection of the joint venture partner for mining, added Jena.

The Orissa government and Sterlite Iron and Steel, another Vedanta group company, have signed another agreement recently for setting up of a five million tonne steel plant in Keonjhar district.

Jena said the agreement stipulated the promoters should go for financial closure of the project within one year of signing of MoU.

The company announced in a press briefing that financial closure would take three years, Jena said.