CM demands revision of sale value for iron ore

Bhubaneswar: Terming the procedure of fixing the sale value of iron ore by IBM as "flawed", Chief Minister Naveen Patnaik has asked the Centre to revise the price to match the prevailing market rate.

"The methodology and procedure being used by IBM is flawed and detrimental to the interest of the state government. The value so derived due to incorrect procedure and lack of in-built checks does not accurately capture the market price of the mineral," Patnaik said in a letter to Union Minister of State (independent charge) for Mines, Dinsha J Patel.

Stating that his government had been repeatedly taking up the matter with the IBM and the ministry, Patnaik pointed out that the existing price structure was biased and reflected a price much lower than the prevailing market price.

IBM publishes the sale value of iron ore on a monthly basis, over which royalty was calculated. "It is seen that the sale value fixed by IBM has been systematically and repeatedly under estimated as a result of which the state government is incurring losses in terms of royalty," he said.

Patnaik requested Patel to personally issue instructions to ensure that the system being used by IBM for capturing the market price of iron ore was revised and systemic checks were built in to benchmark and cross check data.

"Till this is done, whenever the sale value fixed by IBM for different grades is lower than the All India average price or the NMDC price, whatever is higher for the particular grade should be adopted for purpose of calculation of royalty on ad-valorem basis," Patnaik suggested in the letter.

He also said the revision of price should be done retrospectively, starting from the time of introduction of ad-valorem rate of royalty for iron ore, so that the state was not deprived of the legitimate revenue from royalty on iron ore.