Odisha Mining Corporation fails to reap benefits from investments in JVs

State controlled mining entity, Odisha Mining Corporation (OMC) has failed to benefit from its investments sunk into 12 joint venture (JV) companies. The JVs were forged across sectors that ranged from iron ore to bauxite mining and coal extraction to power transmission.

A report on the Public Sector Undertakings for the year ended March 31, 2017, shows at the end of 2016-17, OMC had invested Rs 40.8 billion into the JV companies. But, none of the JV projects was completed (as on October 2017). Non-commissioning of projects was primarily due to delay in finalisation of project development agreements, failure to obtain forest clearance and inadequate monitoring by JV partners. Consequently, OMC could not derive the envisaged benefit from these projects.

The JVs formed by OMC include Rio Tinto Orissa Mining Pvt Ltd, Odisha Thermal Power Corporation Ltd (OTPCL), Nuagaon Coal Company Ltd, Kalinga Coal Mining Pvt Ltd, Neelachal Ispat Nigam Ltd (NINL), Keonjhar Infrastructure Development Company Ltd, Angul Sukinda Railway Ltd, Haridaspur Paradip Railway Company Ltd, South West Odisha Bauxite Mining Pvt Ltd, East Coast Bauxite Mining Company Pvt Ltd and Mandakini B Coal Corporation Ltd.

CAG in its performance audit observed that the coal mine operation could not commence due to delay in preparation of DPR (detailed project report), survey of land and delay in finalisation of mining plan. Subsequently, Ministry of Coal deallocated the coal block in September 2014. Due to this, the entire expenditure of Rs 90.6 million became infructuous.

OMC had formed a JV company- OTPCL with another state PSU- Odisha Hydro Power Corporation Ltd (OHPC). The JV was formed to set up a thermal power plant of 3200 Mw capacity for supply of power to Odisha. OMC as on March 2017, had invested Rs 13.42 billion as its equity share in the JV. Though the project was to be completed within 48 months from April 2006, it got mired in delays arising out of acquisition of private land and non-finalisation of coal mines for the power plant. The delay in project implementation led to a cost overrun of Rs 20.43 billion. Besides, the delay also denied OMC any return on its equity investment. The state government accepted the facts of the central auditor in November 2017.

According to the CAG report, OMC between 2012 and 2017 had surplus funds ranging from Rs 51.49 billion to Rs 58.67 billion. During this period, OMC had identified 36 projects for execution. But, the actual implementation was limited to eight projects which included three projects on the core activities of the company. The projects envisaged enhancement of production as well as evacuation of ore through mechanical means.