Bhubaneswar, March 31: A performance audit by the Comptroller and Auditor General of India has revealed serious lapses in the functioning of Odisha Mining Corporation Limited (OMC), highlighting inefficiencies in planning, production, compliance, and financial management that have resulted in massive avoidable expenditures and revenue losses.
Odisha, endowed with vast mineral wealth—holding 53% of India’s iron ore, 73% of bauxite, and the entire chromite reserves—relies heavily on OMC, its sole state public sector enterprise in the mining sector, for revenue generation. However, the audit covering the period up to March 2023 paints a troubling picture of systemic shortcomings.
Out of 36 mining leases held by OMC, 18 mines remained non-operational for periods ranging from six to over 35 years. The primary reason cited was delay in obtaining forest clearances due to procedural lapses. Despite inactivity, OMC incurred avoidable expenditure of ₹163.36 crore between 2018 and 2023 on surface rent, water rent, and manpower costs, including watch and ward.
In a significant lapse, OMC extended the Unchabali iron ore mining lease from 2008 to 2058, even though the mineable reserves were projected to last only until 2028. This decision, taken in February 2022, led to avoidable expenditure of ₹85.21 crore in 2022-23 and created an additional liability of ₹232 crore towards royalty payments.
At the Daitari iron ore mine, OMC failed to secure Consent to Operate in time after receiving enhanced environmental clearance. Due to delays in application and lack of follow-up with authorities, the company could utilise only part of its increased production capacity, resulting in a shortfall of one million tonnes and a potential revenue loss of ₹606.43 crore.
The audit also found that OMC extracted minerals beyond permitted limits or without mandatory clearances. This resulted in penalties amounting to ₹3,761.88 crore between 2017 and 2022. Additionally, ₹602.27 crore was paid during 2018-23 for excess production beyond approved limits under Consent to Operate and Mining Plans.
OMC failed to segregate ore based on grade in several mines, including Gandhamardan-B, Kurmitar, Jhilling, and Tiring Pahar. This led to payment of royalty at the highest grade, causing an additional financial burden of ₹938.52 crore over five years.
The Chrome Ore Beneficiation Plant (COBP) project suffered a delay of 12 years, being completed only in February 2023 against its original deadline of February 2011. The delay led to cost overruns of ₹48.09 crore. Furthermore, closure of the old plant and delayed commissioning of the new one resulted in idle investment of ₹85.50 crore and revenue loss of ₹61.16 crore due to sale of unprocessed sub-grade ore.
The audit flagged several contract management issues. At Daitari mine, OMC paid ₹36.48 crore towards electricity charges to a contractor despite already recovering actual expenses, resulting in an undue benefit of ₹25.79 crore.
In another instance, contractors were overpaid ₹32.64 crore as sub-grade ore was incorrectly treated as high-grade ore during blending operations across multiple mines.
OMC also failed to adjust advance royalty payments in a timely manner, leading to blocked funds and loss of ₹41.22 crore in interest. Additionally, incorrect pricing methodology in e-auction of sub-grade chrome ore resulted in under-realisation of ₹16.51 crore.
