The Comptroller and Auditor General (C&AG) of India, in its compliance audit report for the year ending March 2022, has highlighted significant revenue losses incurred by the Odisha Mining Corporation (OMC) due to errors in floor price fixation during e-auctions of chrome ore. The report, which scrutinizes public sector undertakings (PSUs), draws attention to financial discrepancies in the calculation of floor prices during the May and August 2020 e-auctions.
Discrepancies in Floor Price Fixation
The audit outlines comparative calculations of floor prices conducted by OMC and those verified by C&AG. The C&AG’s audit found that the floor prices for chrome ore were incorrectly calculated, resulting in substantial losses for the Odisha government.
May 2020 e-Auction
- OMC calculated the floor price for sub-grade chrome ore at ₹1,940.56 per metric tonne (MT), while the audit found that the correct floor price should have been ₹2,151.33 per MT.
- The difference of ₹210.77 per MT, when applied to the total quantity of 31,468.29 MT sold, resulted in a loss of ₹66.32 lakh.
August 2020 e-Auction
- OMC's floor price was set at ₹2,180.50 per MT, but the audit corrected this to ₹2,410.07 per MT.
- This ₹229.57 difference per MT, when multiplied by the 56,870.13 MT sold, led to a revenue loss of ₹1.30 crore.
Overall Losses
The combined total of chrome ore sold in both auctions amounted to 88,338.42 MT. The erroneous fixation of floor prices across these two auctions culminated in a cumulative revenue loss of ₹1.96 crore for OMC and the Odisha government.
Audit Insights and Recommendations
The C&AG’s report underlines the importance of accurate floor price calculations to maximize revenue from natural resources. It recommends revisiting the methodologies used by OMC for calculating recovery percentages and conversion costs, both of which played crucial roles in the discrepancies observed. The audit suggests the need for stricter oversight and the adoption of more robust financial controls to prevent future losses.
This revelation comes at a time when Odisha’s mining industry, especially in the domain of minerals like chrome, is crucial to the state's economy. Revenue optimization from such resources is vital to the state's financial health, and errors in calculations can have far-reaching consequences on public sector profitability.
Implications for Odisha’s Economy
Mining is one of the pillars of Odisha's economy, and chrome ore, in particular, is a significant contributor to the state's revenue stream. Any revenue loss from such key resources can affect infrastructure projects, social welfare programs, and economic development initiatives. Given the competitive nature of the mining industry and its importance in Odisha’s economy, the government is likely to closely examine the findings of this audit and take corrective measures to prevent similar occurrences in the future.
The C&AG’s report serves as a critical reminder for public sector undertakings to maintain financial prudence and avoid preventable revenue leakages, especially when managing valuable natural resources. The Odisha Mining Corporation will likely face increased scrutiny in the coming months as authorities seek to address the losses and ensure greater transparency in future e-auctions.
In conclusion, this audit report sheds light on how even minor calculation errors in industries as vital as mining can lead to significant revenue losses. Going forward, it is essential for PSUs like OMC to strengthen their financial oversight mechanisms and ensure that the state’s resources are managed in the most efficient manner.
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