CAG pulls up OMC for failure to install beneficiation plant

The Comptroller and Auditor General of India (CAG) has pulled up the Orissa Mining Corporation (OMC) for its failure to install a beneficiation plant for processing of low grade chrome ore to high grade ore.

The corporation's failure to put up the beneficiation plant with an annual capacity of 0.98 million tonnes deprived it of the opportunity to earn an additional revenue of Rs 555.81 crore and the Government of India to earn export duty of Rs 90.55 crore.

The chrome ore beneficiation plant was supposed to kick start operation in 2006-07.

Moreover, the inability of the company to achieve the targeted production of iron ore during 2002-03 to 2007-08, except for 2006-07, led to a revenue loss of Rs 350.10 crore. The shortfall in iron ore production in the said period was 4.5 million tonnes.

The CAG report has pointed out that OMC extended undue benefit of Rs 15.52 crore to a contractor in 2004-05 due to payment of higher wage component.

Also, in 2006-07, the company extended undue benefit of Rs 14.82 crore to another contractor due to payment of dewatering charges disregarding the actual deployment of pumps.

In addition, the failure of OMC to collect entry tax from the buyers at the time of sale resulted in avoidable burden of Rs 2.35 crore in 2006-07.

Besides, the short provision of Net Present Value (NPV) on broken forest land of 12 mines in 2007-08 has resulted in understatement of liability for NPV and overstatement of profit by Rs 26.61 crore.

According to the CAG report, OMC had arrears of accounts for one year (as on September 2009). The report notes that the state PSU is not functioning efficiently and there is tremendous scope for improvement of its overall performance.

The report has stated that OMC needs to imbibe greater degree of professionalism to ensure the delivery of its products and services efficiently.

CAG has called upon the Orissa government to introduce a performance-based system of accountability for the PSUs.