OMC failed to achieve targets, lost opportunity to earn Rs 18.39 bn: CAG

The Office of the Comptroller & Auditor General of India (CAG) has rapped state-owned Odisha Mining Corporation (OMC) for failing to achieve the production targets of iron ore and chrome ore during 2012-17.

As OMC failed to achieve the targets, it resulted in a shortfall of 11.4 million tonnes of iron ore and 270,000 tonnes of chromite ore during the period. OMC lost the opportunity to earn revenue of Rs 18.38 billion, the central auditor observed in its report on Public Sector Undertakings for the year ended March 2017.

The state government in its reply to the performance audit said that the production target of OMC was revised considering constraints and situations prevailing at that time. Besides, obtaining different statutory clearances were not in the control of OMC. The central auditor felt that the reply was not acceptable as process of obtaining statutory clearances was delayed by OMC itself in most of the cases.

The CAG report goes on to say that OMC could not achieve its own target of production of iron ore in any of the five years ending March 31, 2017. The shortfall in production ranged from 16.47 per cent to 65.24 per cent. The maximum shortfall in production was noticed at its flagship Gandhamardhan and Daitari iron ore operations.

In case of chrome ore, OMC achieved the production target during 2013-15 but it did not achieve the target in 2012-13 and 2015-17. The shortfall in production ranged from 4.80 per cent to 37.78 per cent during three out of five years of operations.

Further, during 2012-17, there was shortage of 521,000 tonnes of iron ore and chrome ore at OMC's operating mines valued at Rs 1.46 billion. The shortage was much beyond the norm. The CAG in its performance audit observed that no proposal had been placed before the board justifying the circumstances under which such losses occurred. Further, OMC had not followed the Board approved norm for accounting of shortage of ore in the books of account.

OMC has also drawn flak from the CAG for delay in commencement of mining operations. Out of 34 mining leases granted to OMC, 26 were inoperative. In case of eight out of 26 inoperative mines, OMC did not start any mining operations since inception. Mining operations commenced during the period of lease in respect of remaining 18 mines. These mines, however, remained inoperative for a period ranging from seven to 37 years. Mines were out of operations due to lack of statutory clearances and non-assessment of ore reserves. Non-operation of mines resulted in unfruitful expenditure of Rs 572.6 million towards dead rent and watch ward expenses.

According to the audit report, OMC failed to install an iron ore handling plant, infrastructure facility and a mechanical evacuation system in its three major operating mines. Due to non-completion of the project, the envisaged benefit of Rs 11.89 billion per annum could not be achieved from two out of the three projects.