Bhubaneswar, Aug. 28: A government-appointed committee has recommended leasing out of mines to the state-run Orissa Mining Corporation (OMC) instead of handing them as captive property to corporate houses. The committee’s report was laid in the Assembly this week.
The committee’s report comes in the wake of a multi-crore mining scam with the Opposition demanding a CBI probe into it. At present, the scam is being investigated by the state vigilance department.
The government had constituted the committee, headed by retired bureaucrat Sanjib Chandra Hota, to suggest measures to enhance the state’s own resources, on March 25, 2010. Pulin B. Nayak, professor at Delhi School of Economics, Tapas Kumar Sen, professor at National Institute of Public Finance and Policy and B.C. Mohapatra, additional secretary (resources) of the state finance department, were its members.
Following the mining scam, the Opposition, especially Congress leaders, have been demanding that the practice of allotting captive mines to industries should be stopped and all mines should be left to the care of OMC. Union minister of state for chemical and fertilisers Srikant Jena had even written to chief minister Naveen Patnaik in this regard.
However, the state government has been generous towards mega industrial houses, almost all of them demanding captive mines for their projects. The most controversial of these has been the government’s recommendation in favour of international steel giant, Posco, which is eyeing the iron ore mines at Khandadhar in Sundergarh district. The government’s recommendation in favour of the South Korean company was struck down by the judiciary.
Senior Congress leader and Opposition chief whip Prasad Harichandan said: “I subscribe to the Hota Committee’s recommendation. No industry should be allowed to have captive mines though they should be given some incentives to make investment in the state. Only then can the state government hope to gain from the operation of mines.”
Harichandan also argued in favour of separate corporations for extraction of different kinds of minerals including iron, chromites and bauxite. “As the state has not properly assessed the size of its mineral wealth, the mining companies can take undue advantage of it,” he said.
Leader of Opposition Bhupinder Singh said: “More debate should take place on this issue.”
On the other hand, the Utkal Chamber of Commerce argued in favour of corporate houses.
“The government invited the industrial houses assuring them of mines. So having made substantial investments, they should be allowed to have mines,” said UCC president Ramesh Chandra Mohapatra.
In order to augment the state’s revenue resources, the Hota Committee suggested that in future, all mines containing important minerals should be leased out only in favour of the OMC instead of being allotted to private operators including mineral-based industries signing Memorandum of Understanding (MoU) with the sate government.
The committee suggests that the MoU should not envisage leasing of any minerals to the industry, it should instead stipulate that mines should be leased out to OMC and the latter would supply the required quantity of minerals to the industry at a price to be agreed between the two. “Selling of minerals by OMC to the industry would attract VAT and would increase the proceeds of the VAT which is not possible if the mines would be captive mines of the industry using the minerals. The financial health of OMC will further improve and it would contribute higher dividends to the state exchequer,” states the Hota Committee.
By strengthening the OMC with deployment of efficient technical personnel, it would develop its expertise in mineral extraction, it would have a core team of technical consultants to aid and advise the state government. “The state government would ensure discharge of corporate responsibility to the people and the region where these mines are located and operated by OMC, in future,” states the Committee.
