Vedanta’s alumina deal intensifies duel in Orissa

Vedanta’s alumina deal intensifies duel in Orissa

Union minister Srikanta Jena wrote a letter to the chief minister alleging the deal would result in a loss of Rs 50,000 cr to the exchequer

DILIP BISOI, The Indian Express

31st July 2006

BHUBANESWAR: An interesting duel between the Naveen Patnaik government and former Union minister and Congress leader, Srikanta Jena, is going on over Vedanta Resources’ 1.4 million tonne alumina project in Kalahandi’s Lanjigarh. While Jena smells a stink in the deal, the BJD-BJP government asserts that the deal is as transparent as ever.

It was Anil Agarwal’s announcement of setting up a world class university, Vedanta University, in the state early this month that prompted Jena into action. At a press conference, he said the proposed university was a ploy to divert the attention of the people from the murky deal between Patnaik and Agarwal on the Lanjigarh refinery project.

Pitching for Patnaik in the battle, state steel and mines minister, Padmanabha Behera, issued an official release which said “the Congress always tries to divert the attention of the people of Orissa whenever the state government takes progressive steps for establishment of projects for the greater interest of the state.” The duel became bitter last week when Jena shot off a letter to Patnaik alleging that the deal would result in a loss of Rs 50,000 crore to the exchequer. Disapproving the government’s signing of the agreement with Vedanta Aluminium Ltd (VAL) unilaterally, Jena suggested that Orissa Mining Corporation (OMC) could have gone for the global tender route for exploitation of bauxite mines. He questioned the rate at which bauxite will be available to VAL for the Lanjigarh project.

Behera, a simple tribal leader from Phulbani district, showed his grit and slapped a reply. Reminding Jena that the deal with VAL (Sterlite Industries Ltd) was signed during the Congress regime in 1997, he questioned why the then JB Patnaik government did not opt for the global tender route to select a partner for OMC. “Our government has decided to keep the mines with OMC against the Congress government’s plan to transfer the entire mine to VAL”, he pointed out.

Countering Jena’s allegation that OMC, which is selling iron ore and chromite through tender route, is maintaining double standards when it comes to bauxite sale, Behera said the market dynamics of bauxite were quite different from iron ore and chromite. Nowhere in India do the alumina/aluninium industries purchase bauxite through the tendering process. Grant of bauxite mines is the normal practice in the country as in the case of Nalco in Orissa, Hindalco in Uttar Pradesh, and Balco in Chhattisgarh. “The bauxite raised by the OMC-VAL joint venture company shall be purchased by Vedanta by paying OMC an amount which will comprise raising cost, royalty payable to the government of Orissa, consideration money equivalent to royalty, and dividend on its 26% free equity, besides any other statutory dues”, he clarified.

As the duel rages, clearly, the last word on the deal is yet to come.