Nations Biggest bank defaulters given mines through auction in Odisha

Report by Malaya Mohapatra; Keonjhar: The state government is boasting of earning crores in shape of revenue through auction of mines in Odisha. But the auction of mines done so far ignoring realities has created uncertainty in revenue collection as the govt has chosen the top bankrupt ,financial defaulters in the country to have the leases through impractical bidding prices. Bhusan Steel has a total gross debt of Rs 42,356 cr by 31st March 2016, and the loans were declared NPA in 2016. Similarly Bhushan Power has a gross debt of Rs 37248 crore by 2016. Essar steel also has a gross debt of 29,448 crores by end of 2015-16 financial year.

These three companies are among the country’s Top twelve big defaulters shortlisted by RBI against whom banks have initiated insolvency proceedings to recover the loans. While the banks are struggling hard to recover their huge loans through legal proceedings from these big defaulters, the state government was pleased to hand over the Ghoraburhani-Sagasahi iron mine of 139.2 Hectares with 99.54 million ton reserve at a premium of 44.35% to ESSAR steel last year. Bhushan Steel was allotted the Kalmong west iron ore mine in sundergarh district having 92 million ton reserve at a premium of 100.5% this year. Bhushan Power and steel was allotted the Netrabandh Pahar Iron Ore mines at a premium of 87.15% premium through bidding this year.

The premium rates offered in the bidding by these companies seems strange and impractical. The premium prices indicate that Bhushan steel and Bhushan Power have offered to pay the sale price of the ore as premium to the govt and incur the loss towards production of the ore from their own pocket. This excludes additional payment of royalty, contribution for District Mineral Fund, National Mineral exploration Trust and other taxes applicable from their own capital. With fall in iron ore prices it is difficult to make a 20% profit for mining companies but how companies given mines on auctions will run their mines at a heavy loss looks fishy. It may be only possible by unfair means either by manipulation of ore-grade and royalty, illegal transport of mineral and manipulation of ore price etc, a mining expert remarked. Even for Essar, mining business at a 44.35 % premium will be a loss, he added.

The mines will ensure steady of raw materials and we will make up the loss while making of steel, an official of Bhushan replied. While fixing the eligibility of bidders in mines auction, the Govt should have carefully eliminated the bankrupt, defaulters and also blacklisted companies involved in illegal mining. But unfortunately most of the mines given on auction has been granted to companies either convicted in illegal mining or blacklisted defaulters for which they have failed to start any work in their mines, in spite of big loans availed from banks, it is alleged. The dream to collect million rupees revenue from auction of mines will only be fulfilled after functioning and operation of the auctioned mines.

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