Non-revision of iron ore prices cost NMDC Rs746-cr during 2007-10: CAG
20 Dec 2012
National Mineral Development Corporation (NMDC) lost around Rs745.94 crore in revenue between 2007 and 2010 as the state-run iron ore miner failed to revise domestic prices of iron ore in line with prevailing market rates, the Comptroller and Auditor General (CAG) has found.
"Due to non-revision of domestic prices by the company in line with movement of market price, the company has suffered a revenue loss of Rs754.94 crore during 2007-10," according to the CAG report tabled in Rajya Sabha today.
NMDC has also subsidised the sale of the steel-making raw material to benefit the steel producer and the consumer. CAG estimates the total benefit passed on by NMDC during 2010-11 at Rs600.83 crore.
The loss to the state-run miner would be even higher considering the international prices of iron ore, CAG said.
"Not increasing the prices (of iron ore) by full percentage in line with the increase in export prices led to a loss of Rs227.40 crore during the same period," CAG said.
NMDC sells iron ore abroad, mostly to Japanese steel mills through long-term contract at prices on par with what Australian and Brazilian exporters get from Japanese mills.