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Karnataka to auction iron ore mines if NMDC not willing for 80% premium

PR Tripathi, former CMD of NMDC says the imposition of 'heavy' premium on a public sector undertaking is not tenable as per law

Press Trust of India  |  Hyderabad 

New ground realities in iron ore

The government is in the process of calling for fresh tenders of and may go in for in case the state-owned NMDC does not sign the contract agreeing for 80 per cent premium in the next three weeks, sources close to the development said.

However, PR Tripathi, former CMD of NMDC says the imposition of 'heavy' premium on a public sector undertaking is not tenable as per law.

NMDC has suspended from its in following the state governments decision to impose 80 per cent premium on ore sales from that minewhose lease hasbeen extended by the government with effect from November 4 for a period of 20 years.

"Based on the request by the CMD of NMDC (N Baijendra Kumar)the matterwas again referred to the But instructions have gone to the officials concerned to prepare fresh tender document for of mines allotted to NMDC if they don't execute the lease documents in the next three weeks. Because the AG may not give a different opinion than what he has already given," sources told

When contacted, Secretary justifying the premium, said the state gave its opinion and the state cabinet had also approved imposition of the premium.

Tripathi alleged the became greedy and said the premium is applicable only in case of fresh of mines but not for lease renewals.

"The is blinded with the concept of revenue. The has become so greedy that they are looking attheshort-term revenues. If any company (PSU)pays 80per cent premium it cannot survive. This is legallynotvalid. It is valid only in case of This is not anauction but leaserenewal. The issue has to be resolved at the level of the The should be sensible enough to understand the issue," Tripathi said.

The Karnataka cabinet has approved the lease of Donimalai till November 2038, on payment of 80 per cent of the average sale value as published by Indian Bureau of Mines, Kataria said.

According to him, the state in the recent past had auctioned 12 mines where the weighted average of the premium was more than 110 per cent and NMDC also participated for mines for which it offered 95 per cent and 105 per cent as premium.

A of NMDC said if the Karnataka government decides to stick to the 80 per cent premium, the would be losing Rs 1,348 per tonne and may result in a loss of Rs 944 crore per annum as it mines about seven million tonnes per annum from that mine.

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

First Published: Mon, November 26 2018. 12:35 IST
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