The failure of the state owned Orissa Mining Corporation (OMC) to install a new chrome ore beneficiation plant at Kaliapani to process 9.86 lakh tonne of low grade chrome ore has deprived the company and the government the opportunity to earn additional revenue of Rs 555.81 crore.
Export duty of Rs 90.55 was also lost in the process, according to the report of the Comptroller and Auditor General of India (CAG), tabled in the Orissa Legislative Assembly today, for the year ending 31 March 2008.
Exposing the inefficiency in OMC, the report said, though the company is in existence for more than 50 years, it could explore only 63 percent of the total mines given to it on lease by the state government. The company also failed to achieve the targeted production during this period despite the fixation of low targets.
Similarly, improper management of inventory by the company resulted in non-disposal and shortage of ores and increase in slow moving and non-moving store items. OMC couldn’t achieve the targeted production of ores during 2003-2008 except 2006-07.
The production of iron ore and chrome ore was below the target by 13.05 lakh tonne and 3.49 lakh tonne respectively from 2005-06 to 2007-08. The production target of contractors against total target fixed ranged between 84 and 93 percent for iron ore, 90 and 95 percent for chrome ore and 29 and 65 percent for manganese ore.
The achievements of the contractors between 2005-06 and 2007-08 in iron ore and chrome ore were also below target. It was 75 percent and 86 percent for iron ore and 91 percent and 85 percent for chrome ore during 2005-06 and 2007-08. However, despite shortfall in production by the contractors, OMC did not levy penalty on four contractors as per the terms and condition agreed with them, which resulted in the non-levy of Rs 94.29 lakh, the CAG report pointed out.
The report stated, the shortfall in production was due to fault of the management like delay in installation of weigh bridge, preparation of ground work, inadequate or delay in deployment of machineries and supply of explosives among others. Due to the failure of the company to provide required facilities resulted in a loss of contribution of Rs 350.1 crore to the revenue. Besides, failure in the replacement of the outdated Ore Handling Plant (OHP) at Daitari resulted in potential revenue loss of Rs 144.76 crore during this period.
Similarly, sale of lump ore instead of calibrated lump ore deprived OMC of earning additional revenue of Rs 3.72 crore. While award of the dumper maintenance contract without reference to available dumper hours caused avoidable expenditure of Rs 1.53 crore, engagement of loading contractor resulted in avoidable expenditure of Rs 2.53 crore. Stating that increasing production target without evolving appropriate strategy led to accumulation of ores resulting in blockage of Rs 71.53 crore, the report stated, failure to repay loan in time resulted in extra expenditure of Rs 22.44 crore.
