CAG says OMC-Sainik joint venture irregular

Though the Odisha Mining Corporation emerged as the highest profit-making government run PSU in the state, the Comptroller and Auditor General of India has criticized it for showing undue favour to a Delhi-based private company.
OMC was criticised for a joint venture with Sainik Mines and Allied Services Ltd for exploiting coal in 2002.
The JVC violated the Coal Mines Nationalization Act, 1973 and coal block allocation orders besides there were irregularities in selection of the JV partner, the CAG said in its latest report which was tabled in the Assembly yesterday.
The report said that originally it was decided that the OMC would�offer 51 per cent stake to the private partner and retain 49 per cent in the JVC.

But after the JV partner was selected through tender, the OMC decided to retain only 26 per cent stake offering the remaining 74 per cent to Sainik Mines.
Stating that there were�irregularities in tendering, the CAG said that�Sainik Mines was shortlisted though it had no experience in coal mining.

"One of the directors who finalized the bid documents, however, was an advisor to a company, the directors of which were also the directors of one of the shortlisted companies," the CAG said.
Criticising the efficiency of the private partner in executing the project, the CAG said that the�agreement for the JVC was extended time to time to July 2013 while the stipulated period of three years ended on December 29, 2006.

The CAG said that despite objections by the Central Empowered Committee of the Supreme Court, representations by two Lok Sabha members against the joint venture, and the directives of the Coal Ministry, the coal block allocation conditions were not complied with by the OMC.
It was on 21 September, 2012, the state government, under pressure from various quarters,�asked OMC to terminate the JV agreement and decided to take up coal mining on its own in terms of allotment order of the Ministry of Coal, it said.
The CAG said that seven state-government controlled PSUs incurred a loss of Rs 1009.73 crore during 2011-12.

The report noted that bulk power supplier Gridco incurred the highest loss of Rs 936.81 crore during the year ending March 31, 2012.�
The other companies which suffered loss included Idcol Iron Works and Odisha Power Transmission Corporation Ltd.
Of the 36 working PSUs in the state, 23 have earned profit of Rs 2305.81 crore. The major contributors were OMC, Odisha Power Generation Corporation and Odisha State Beverage Corporation.
OMC has reported the highest profit of Rs 1880 crore, the report said.