Odisha Govt incurred huge revenue loss of over Rs.8,793Crore in mining sector due to delay in imposition of penalty

Bhubaneswar
09-5-21
( By Special Corresponded)

The Odisha State Govt has incurred huge revenue loss of over Rs.8,793Crore in mining sector due to delay in imposition of penalty for violation of Rule 12A of Mineral Concession Rules 2016 for the shortfall in dispatch quantities from the auctioned iron ore mines even after the express approval of the State Government for early recovery. This huge loss is vivid with clear understanding of the fact the permissible production under an environmental clearance is granted on financial year wise basis. For new auctioned mine also, the permissible production for 1st financial year is calculated on pro-rata basis from the date of grant of lease. If the EC could be considered from the date of grant, and the year for them could have been 12 months thereon, then the pro-rata concept introduced after the judgment of the Hon’ble Supreme court in W.P.(c) 114 of 2014, dated 02.08.2017 would have no application.
In a petition to the State Govt , Dr Sudhi Ranjan Dash, President ,” ASSURED” told that “by adopting and accepting such approach the State government is helping big players like JSW who blatantly flout laws at the cost of public revenue. This is clear contempt of the Hon’ble Supreme court and we would take all measures to get this public money. It is because of these players who played down the production to avoid paying hefty premiums while they worked on Central government to amend laws that iron ore sells at Rs10,000 per ton. So, they benefit by not paying full premium, Royalty, DMF and NMET and thereafter enhance steel prices on the pretext that iron ore prices are high.”

The applicable recovery of premium and 24% penalty on the major mines are as follows:

Dr Dash pointed out that , Revenue collection from mining sector in FY2019-20 was Rs.11,020Cr. with share of iron ore mining was 62% generated from operations of all non-auctioned mines.Post 2020, the premium of auctioned mines were expected to fetch larger revenue to the State Exchequers. Against this positive assumption, there is a sharp fall in production of 30% from 145mt in FY20 to 101mt (estimated) in FY21 in Odisha and state has missed the opportunity to maximize revenue where prices of iron ore lumps of 62-65%Fe grade has increased by 98% from Rs.3286/t to Rs.6500/t and prices of fines of corresponding grade has increased by 146% from Rs.1995/t to Rs.4918/tonne (source: Indian Bureau of Mines)
The sub-rule 1 of Rule 12A of MCR 2016 states compliance of minimum dispatch of 80% of the average of the annual production of two immediately preceding years on pro-rata basis from all auctioned mines. The relevant clause 7.1.1 of the MDPA of Mining Lease Deed prescribes premium payment on monthly basis within 20days of expiry of each month read with schedule D prescribes that penalty in case of shortfall in dispatch quantity will equal to 24% of IBM sale price X shortfall quantity + premium % X average sale price of mineral X shortfall quantity.
Delay in implementation of State Government order dated 22.12.2020 where approval has been granted on the principle to be adopted for calculation of the said penalties in case of monthly shortfall in dispatch, but even after lapse of more than 3 months, his clear instructions for early recovery has not been executed leading to huge loss of revenue for the State.
Due to low dispatch by the auctioned mines, the State Government has already lost revenue of over Rs.8,793Cr. during July’20 to March ’21 towards monthly shortfall in dispatch as per respective MDPAs of auctioned mines. The applicable recovery of premium and 24% penalty on the major mines like Nuagaon iron ore mine, M/s JSW Steel Ltd
,Jajang iron ore mine, M/s JSW Steel Ltd
Narayanposhi iron ore mine, M/s JSW Steel Ltd and Ganua iron ore mine, M/s JSW Steel Ltd are 457 crore , 1733 crore , 254 crore and 48 crore respectively. Likely applicable recovery Balda iron ore mine of M/s Serjuddin
5662 crore and Thakurani iron ore mine, M/s Arcelormittal India Pvt. Ltd is 638 crore
These lessees have fluently produced exceeding their monthly production limit as per their respective EC to strive to meet the shortfall in 3rd and 4th quarters of the financial year 2020-21.
Delay in implementation of State Government order had given opportunity to new lessees for policy advocacy to amend the Statute ultimately loss to the State Revenue. This delay in implementation of aforesaid directions and provisions prescribed under 12A of MCR 2016 has given sufficient opportunity to new lessees to adopt all manipulations and policy advocacy through their paid industry associations to change the such statutory provision such minimum dispatch requirement on quarterly basis in place of monthly basis.

“ASSURED” urged the Govt to pass directions to immediate recovery of over Rs.8,793Cr. in the form penalty for those auctioned mines which have dispatched less than the minimum production requirement under their respective MDPAs.
“These profiteering big companies are mocking the systems and the State Government most act on it “- told Dr Dash