'GMDC's lignite mining has cost it dear'

The Comptroller and Auditor General's (CAG) annual report of 2005-06 says that the state government-run public sector company Gujarat Mineral Development Corporation Ltd had to forgo the sale of 17 lakh tonnes of lignite it planned to mine from Tadkeshwar as it mined prior to obtaining environmental clearance from the Ministry of Environment and Forest (MoEF).

The clearance is mandatory before commencing the mining work. This had resulted in suspension of the work already awarded by the company to the contractors. The sale of lignite the company had to forgo was worth Rs 161. 50 crore.

Giving details, the CAG report released on March 31 states that the company had applied to the state government to carry out lignite mining in Tadkeshwar in June 1996. The state government had permitted the company, subject to mandatory environmental clearance from MoEF, Government of India, in March 2002.

However, without taking MoEF clearance the company awarded the work to remove overburden (OB) earth over the mineral reserves and to mine lignite from January 2004, says CAG report.

From February to September, 2004 the contractors mined 25.18 lakh cubic metres of OB and mined 0.03 lakh tonnes of lignite for which the company spent Rs 6.50 crore.

However, the company had to suspend the work in September 2004 as it did not have environmental clearance from MoEF and mining without permission was violating the provisions of Environmental (Protection) Act, 1986. The company could resume work only in March 2006 after receiving clearance from MoEF in October 2005.

As per the company's plans it would have mined and sold 17 lakh tonnes of lignite during 2004-05 and 2005-06. However, the mining commenced without securing environmental clearance. If the lignite was sold it would have fetched the company Rs 161.50 crore says CAG report.

Moreover, the report also mentions excess allowance of Rs 5.42 crore to two companies. The companies which got excess allowances are Nirma Ltd and Sanghi Industries Ltd. As per the CAG report, GMDC allowed these companies excess discounts worth Rs 5.42 crore.

The CAG report also mentions that the company had failed to utilise its machinery and manpower in removal of OB at Panandhro lignite project, which resulted in excess expenditure of Rs 2.70 crore which could have been avoided if the machinery and manpower were utilised to its potential.

The report also mentions that the company had to spend Rs 2.26 crore more for the excess consumption of diesel in removal of OB from Panandhro lignite project.