Further comments by 

Mr. Srikant Jena


 

1. In response to Mr. Dasverma's mail (in blue)

From: Sandip Dasverma <sandip.kumar.dasverma@gmail.com>
>Date: Sun, 6 Aug 2006 01:14:34 -0700
>Subject: Re: Senior Congress Leader Srikant Jena is not convinced the
>way government is handling mining (DDMO)
>To: Sachi Satapathy <sachisatpathy@gmail.com>
>Cc: srikant jena <srikant_jena@hotmail.com>
>
>Dear Sachi babu:
>I see some arguments in Mr. Jena's e-mails and they seem legitimate. I also
>read the two blogs that Chilla forwarded, where the cabinet approved after
>going through the objections of the Governer. Obvioulsly there are holes in
>the cabinet arguments which can't be put to rest without a thorugh
>investigation. Like it comes to my mind as to why the state govt. will fix
>a
>price for 30 years. I did not see any escalation clause nor there was any
>attempt to review or revisit the implications. The argument that 26%
>control
>is sufficient to protect their (OMC and GOO) and  interest does not make
>sense. At least 51% is required to have contol as far as I know.
>However the numbers in Mr. Jena's arguments do not make sense if they are
>what the GOO paper referenced state. He better submit a basis of his
>arrival
>at 50 thousand crores.
>Any one can arrive at the numbers if he is given the following:
>1. Total quantity of Ore involved.
>2. Market price on a particular recent day in $(usd)
>3. The money OMC is going to charge for the ores Max/ Min.
>Once we know the basis we can all calculate whether the numbers are
>correct.
>This is necessary for the civil society to come to it's own conclusion.
>I think if he thinks he has enough material, he should go for a public
>interest litigation. Because if he thinks that Orissa state is giving away
>that kind of money(about a 2000 crores per year) as a patriotic and
>informed
>citizen and an eminent citizen at that it is his duty to start litigation
>before the present GOO gives away the store.
>But so far Sri Jena has not convinced neither me nor the civil society
>about
>the numbers, which don't add up and appear goofy. However as I have said in
>my write up in my blog below, I am intrigued as to why the GOO in a
>monopolistic situation is not taking advantage of it??  Any patriotic Govt
>would try to maximise it's people's benifit by creating competition to test
>market prices and not defend non competitive actions. Because MOUs as
>commented by Mr. Jena are not a contract and the Hirakud Aluminium episode
>should have taught the cabinet - many of whose members were around in 70s
>and 80s to know the implecation of a fixed priced contract. Additionally
>they are silent about externals, explained in my article/blog, below.
>
>http://www.thesouthasian.org/archives/2006/revisiting_orissa_development.html
>or:http://mathtalentsearch.blogspot.com/2006/06/revisiting-orissa-development-plans.html
><http://mathtalentsearch.blogspot.com/2006/06/revisiting-orissa-development-plans.html>
>
>Best wishes,
>Sandip

From: srikant jena <srikant_jena@hotmail.com>
Date: Sun, 06 Aug 2006 18:13:10 +0000
Subject: RE: Sandip Dasverma: why the state govt. will fix a price for 30 years
To: sachisatpathy@gmail.com

Dear Mr Satpathy


I am glad that Mr Baral has raised one important issue, that where and how I could arrive at  50 thousand crore loss to the exchequre?What is the basis of this calculation.?It is ovious for any one who has not gone in to the details of the  agreemment will naturally ask this question and normally will arive at the conclusion that its just a political staunt.

Let me give the basis.It is simple and plain.In the agreement the OMC/STATE GOVT HAS AGREED TO SUPPLY 150 MILLION TONS OF BAUXITE ORE TO VEDANT OVER A PERIOD OF 50 YEARS.

Vedant will produce 1million ton of  Alumina from its Langigarh plant using the baxite being supplied by OMC on a long term purchase agreement basis which is the part of agreement (clause 2.3.3.)

2.5 to 3 tons of bauxite makes one ton of Alumina.

The cost of production of one ton of  Alumina by Nalco is 90$ to 100$. Can be seen from there balance sheet.

The average price of Alumina in the  market today is   500$ to 600$ per ton. Nalco gets a profit of 400 to 500 usd per ton on an average of Alumina sell. Nalco last year made a net profit of 1600cr.This year Nalco profit is aimed at 2000cr. Nalco 's capacity is just half of Vedant's. I hope any one can calculate how much profit  Vedant will make on todays market price. Nalco's frofit is govt's earning but  Vedant's profit is his profit and loss to the state.

There is another misconception about omc's partnership of 26% with vedant. It is not in their Alumina plant or  smelter it is only a joint venture with sterlite an another sister company of vedant only for mining of ore only. omc is a contractor of omc for  raising their own minerals.

Mr padhy in his letter said vedant is investing 30 thousand cr but it is not thirty thousand it is only 3 thousand cr for their refinary which they will get back in one year's operation.
i will clarify if thjere is any doubt.

Srikant Jena 

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2. An Appeal To Our Legislators: By Mr. Srikant Jena

Dear Friends,


I am writing this letter at a very crucial juncture of the state's  history with a host of domestic and international companies rushing the state to loot our minerals. At this hour of crisis, we need to rise above our political differences in the greater interests of the state and the masses looking at us for their well-being.

It is a shame that after 57 years of independence, the state is billed as the poorest state with more than 50% of people struggling to eke out a livelihood. The irony is that all along, we had been tom-tomming about our rich natural and mineral resources.

The state's economy is characterized by lowest per capita income in the country largely due to handing over our high value mineral resources to the private ompanies and individuals for a song. Here I am presenting below few cases for your information. Iron-Ore: Orissa has a total reserve of 4177 million tons of iron ore,
which is about 34% of the country's total reserve. In the last four
years, the booming prices of iron ore have benefited the lease holders
and what the state and its people got is just pea nut. I am citing
cases of four major players having iron ore mining leases in the
state reeking mind blowing profit.

TISCO - This Company has mined about 20 million ton of iron ore in the
last four years. It has minted at least Rs.3000 crore only from the
iron ore it mined. The calculation has been made on the basis of
average ex-mine market price of iron ore at Rs.2000 per ton. Just take
away the royalty of Rs.26 per ton + mining cost of Rs.300 per ton.
Adding other expenses, the cost of iron ore at ex-mine will be at best
Rs.500 per ton. That means the company made a minimum profit of
Rs.1500 per ton of iron ore.


A B Birla Group [S L Mines] - Going by the profit as state above, this
group, which mined about 12-15million ton of iron ore in the last four
years, made a profit of around Rs.2000 crore.

Rungta - This Company also had mined about 12-15 million ton in last
four years making a neat profit of about Rs.2000 crore.

Jindal [Sharada mines] - This company has also mined about 12-15
million ton in the last four years making a minimum profit of Rs.2000
crore.

The above four companies have made a whopping profit of Rs 9000-10,000
crore in the last four years. We have not taken the production of iron
ore by other companies including public sector SAIL, OMDC and OMC.

What Did Orissa Get?

The state government got a meager Rs.150 crore as royalty in the last
four years from the above mentioned four companies. The moot question
is why and how these companies are allowed to plunder the state? There
is an urgent need for a fresh look into the whole gamut of the state
government's mineral policy.

The state government has signed MoUs with as many as 36 private companies
by allowing them to plunder the mineral reserves. The latest entrant
to eat away our resources is South Korean steel major, Posco.

The state government have signed on June 22, 2005 a MOU with Pohang
Steel Company (POSCO) of South Korea for 60 crore tons of iron ore.
This means a transfer of Rs.90, 000 Crores (Rs.1500 per ton X 60 crore tones) of
Orissa's mineral wealth to the South Korean company at current rupee
price of iron ore per ton.

The Japanese and Korean steel plants buy ores globally and so there is
a market price of ores.  Particularly, POSCO buys iron ore at market
prices to produce steel.   In 2004, POSCO sold 30 million tons of
crude steel for $190 billion with a net profit of $37 billion.  From
12 million tons of crude steel POSCO will produce from Orissa's iron
ores per year it can thus generate an estimated net profit of $14.8
billion per year even if POSCO buys our iron ore at prevailing market
prices.

Why should Shri Naveen Patnaik agree to sell Orissa's iron ores to
POSCO for 6% of market price fetched by OMC from the same mines slated
to be transferred to POSCO, unless, of course, private deals for
kickbacks have been made?  Such private deals for self-enrichment,
going on during the last three decades, have ruined our public wealth,
making Oriyas poorest, most illiterate and sickest in India.

Bauxite: Let us consider other minerals too. In the cases of Vedanta,
Utkal Alumina of Birlas and others, bauxite pricing was done without
taking market prices into consideration. These companies would rake up
net profit of over Rupees one lakh crore in the next three decades by
exhausting our resources.

Chromite: The state has the monopoly by having 98% of the deposit. Six
private companies are making a profit of Rs.6000 crore every year by
paying a meager Rs.150 per ton as royalty against the market private
of more than Rs.5000 per ton of chrome ore. Again Tisco is making a
net profit of Rs.600 to Rs.700 crore every year in chrome ore.

This grave economic injustice to the people of Orissa calls for an
open debate on the efficacy of the present mineral policy, which has
facilitated the crony industrialist to loot and plunder away our
minerals by enriching a section of ever greedy bureaucrats and vested
politicians. Now multinational companies also are eyeing for these
reserves.

Will Posterity Pardon Us?

Can all of us remain mute spectators to the open loot? Will our
posterity pardon us for these grave mistakes if we allow this loot to
go on?

LET THE INDUSTRIES BE CAPTIVE TO OUR MINERAL RESERVES, NOT THE OTHER WAY ROUND.

This is the practice across the globe. Let there be industrialization,
but not on the terms and conditions dictated by the private companies.

In the market driven economy, the price of a litre of milk from OMFED
you buy is determined by the market forces. So also other commodities.

Why should not TISCO, POSCO, VEDANTA, JINDALS, BIRLAS, RUNGTAS and
others be asked to buy the minerals at the prevalent market price?

Tens of thousands of small sector industrial units are sourcing their
raw materials at market price. Even a couple of steel plants in the
country are buying iron ore at the prevalent market rate. Why is the
state government subsidising heavily these big and large steel
manufactures and mine owners?

Orissa would have been richer by at least Rs 40,000 crore had it opted
to sell its iron ore at the prevalent market price and could have
easily cleared its debt stock of Rs 40,000 crore.

I call upon you to seriously ponder over the issues raised above and
force the Government to scrap the present mining policy. The state
government must put hold on the implementation of MoUs till a new
mining policy is in place following proper debate and consultations
with all the stakeholders.

Let the Government come out with a new but progressive mineral policy
keeping the public interest in mind by incorporating market price as
the benchmark for optimum utilisation of all kinds of minerals
benefiting all the stakeholders.

I am sure you will rise above party lines keeping the state interest
in view to ensure market price for our valuable minerals.

SRIKANT JENA

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3.  In response to the following clarification sort by Mr. Baral

Sachi:

I came across the following two documents (which were
prepared by the Orissa government and OMC in 2004)
in the Internet which seem to answer many of the questions
Mr. Jena has asked in his letter.

http://vedantauniv.blogspot.com/2006/07/press-release-dated-oct-192004-by.html

http://vedantauniv.blogspot.com/2006/07/council-of-ministers-confirms-decision.html

I would request Mr. Jena to clarify which answers in those
documents he does not agree with.

best regards

Chitta

 

From: srikant jena <srikant_jena@hotmail.com>
Date: Sat, 05 Aug 2006 13:14:13 +0000
Subject: RE: Prof Baral Provided two links to Mr Jena for his
clarity(Another Letter From Manoj)
To: sachisatpathy@gmail.com

Dear Mr Satpathy


I have gone through the two attachments send by Mr Baral. I have explained
to State govt about the '97 MOU which was redundant after the 1999 amendmend
to mineral concession rule by govt of India.
In 2003 Mr Naveen patnaik govt signed a fresh MOU. WHICH THEY SAY NOW THAT
WE JUST HONOURED THE MOU OF 1997 BY MR J.B. PATNAIK. WHY THIS HONOUR TO THE
PREVIOUS GOVT WHICH WAS VOTED OUT BY THE PEOPLE OF ORISSA?

Govt of Orissa would have gone for a global tender putting the same clause
as is in vedant  of settingup of a refinary and a smelter plant in Orissa
for which OMCwould have given the same  assurance as in the case of vedant
of a  long term agreement of supplying the bauxite would have easly got a
minimum of 500 to 700 rupees per ton.

Three ton baxite makes one ton Alumina. Nalcos per ton Alumina cost of
production is 90 to 100 us dollar and sells now at 500 to 600 us dollar per
ton in the market. Vedant will make a minimum profit of two thosand crore
annually at the present market price.Why this benefit to vedant ?

This is simply a ploy to avoid the core issue-- ''what is Orissa's
benefit''.What is Mr Anil Agarwal's or Mr J.B Patnaik's  or of  Mr Naveen
Patnaik's benefit is not important for people of Orissa.

If  only to honour Mr J.B Patnaik, Mr Naveen Patnaik,( which has been stated
by the state govt's press note)  can compromise   fifty thousand crore  of
the poor state  like Orissa then God can not save us.
Let this debate continue and in the process if we can help the state then
it will be agreat achievment.

Srikant Jena 

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4. In response to further clarifications sort by Mr. Baral and in response to Mr. Dasverma. (in red and blue below)

Dear Sachi:

I sincerely request the chief minister to answer Mr. Jena's questions.
However, Mr. Jena's clarifications have me more confused.
(I list two specific questions below.)
I hope Mr. Jena would be kind enough to clarify them further.

best regards
Chitta

Question 1:

I would like Mr. Jena to compare the MOU signed by the Congress government
with Sterlite/Vedanta in 1997 and the later MOU and agreements signed by
the Naveen Patnaik government with SterliteVedanta.
Which one is better and why?

My other question is given below:


From: srikant jena < srikant_jena@hotmail.com>
Date: Sat, 05 Aug 2006 20:00:07 +0000
Subject: RE: Prof Baral Provided two links to Mr Jena for his
clarity(Another Letter From Manoj)
To: sachisatpathy@gmail.com, satya_samaj@rediffmail.com,
george@nde.vsnl.net.in, nageshwarpatnaik@hotmail.com,
satabdi_jena@hotmail.com, j_pati_orissa@yahoo.com

Dear Mr Satpathy

Earlier  I had  responded in general to the clarification or explanation
given by the State govt on the vedant agreement.

Let me put few questions arised out of the clarification sought by  the then
Governor of Orissa Mr Rajendran from the State govt on this issue.

1)Naveen Patnaik  Govt's stand is ---Since the 1997 MOU of Mr J.B. Patnaik
with Vedant was in force we had no option than to sign an agreement within
the framework of '97 MOU.

Question arises -- A)If '97 MOU was in force then why another MOU was signed
between Vedant and State govt/OMC in 7th of June 2003 ?


See Question 1 above: Between the 97 MOU and the 2003 MOU
which one is better for Orissa and why?


B)Is any MOU mandatory  legally on any Party?

C)Is not the '97 MOU became redundant after 1999 amendment of mineral
concession rules by  Govt Of India ?
2) Vedant Refinary Foundation stone laying by Mr Naveen Patnaik before one
year of agreement--


Q 2: When was the foundation stone laid? In the above you say the MOU was
signed between Vedant and State govt/OMC in 7th of June 2003.

In http://www.acpp.org/uappeals/2004/04031605.html
it says that the foundation stone was laid in 8th June 2003.

8th June 2003 is after 7th June 2003; not one year before.
So there must be some confusion somewhere.
Could Mr. Jena please clarify.


best regards

Chitta

-------- 

From: Sandip Dasverma <sandip.kumar.dasverma@gmail.com>
Date: Mon, 7 Aug 2006 01:17:54 -0700
Subject: Re: Srikant Jena's Appeal to Legislator s what Did Orissa
Get?" and asks "Will Posterity Pardon Us?"
To: Sachi Satapathy <sachisatpathy@gmail.com>

*Dear Sachi babu:*
*I find what you have asked GOO and it's chief, to be very appropriate. They
need to clearify what they did and why they did. If they did something wrong
let it be corrected before it is too late. *
 *It is amazing what Mr. Srikanta Jena, ex-Union minister has posted. He has
argued very persuasively that only from Iron ore underselling (from market
rate) Orissa is losing 40, 000 crores. This of course does not include
externals (the cost of returning the earth's surface to normal condition
etc). *
*Though a question could be asked as to why, when he was minister he did not
ask this questions? Tata has been doing this for all of the last 50 years of
which he has been in power for at least 20.  *
*But even if he has not and did not - present Govt dutybound to answer why
such anti-public action was taken? Why the GOO did not protect it's own
interest? In whose interest such actions were taken. *
*The civil society believes Mr. Naveen Patnaik and his cabinet need to
answer these questions, pronto. If not some one can go to court and whole
thing will get stalled for years. *
*Best wishes,*
*Sandip*

 

From: srikant jena <srikant_jena@hotmail.com>
Date: Mon, 07 Aug 2006 14:01:13 +0000
Subject: RE: Sandip Dasverma:It is amazing what Mr. Srikanta Jena,
ex-Union minister has posted
To: sachisatpathy@gmail.com

Dear Mr Satpathy

Thanks for your comments.

Mr Dasverma has rightly asked me why I did not raise this ISSUE when   I was
a minister. if  Mr Dasverma takes little pain to look to the news papers of
those years can see that, my view was always the same that ''let not the
valuable ore of Orissa be handed over to pvt companies in allmost at free
instead of market price'', 


Whether it was Mr Biju Patnaik's govt or of Mr J.B. Patnaik's or of Mr
Naveen's.''I have always said the mineral resouce of Orissa be managed
through OMC and industries coming to Orissa be given as per their
requirements in a concessional price (not free)so that industry can be
competative  and the state will be immensly benefited. We need not even
depend on the union govt for devolopment rather we can help govt of india.
But who listens. Orissa press is mostly family controled. The leading news
paper Samaj can play a big role. They need to be  motivated. National press
doesnot care Orissa.

Mr Baral has raised two questions. One is which Mou  is better.Mr
J.B.PATNIK'S OR OF MR NAVEEN PATNAIKS?BOTH ARE DANGEROUS AND BAD FOR
ORISSA.In the case of Naveen Patnaik ,he converted MOU to AGREEMENT.In the
case of J.B Patnaik the '97 mou became redundant after '99 mineral
concession rule amedment by govt of India.
Second one is foundation stone laying cere mony date. Mr Naveen Patnaik laid
foundation stone one year before the AGREEMENT NOT MOU.

Normally no Chief minister or minister lays foundation stone before a formal
agreement but in the case of vedant it was done only to give credential to
Mr Anil Agarwal and raise money from the market which he has done it
successfully to his advantage. Is it not an undue favour?

MR LAXMI MITTAL SIGNED ONE MOU WITH GOVT OF JHARKHAND WITH BIG PUMP AND
CEREMONEY AND SUBSEQUENTLY CAME TO ORISSA AND SIGNED ANOTHER ONE OF SAME
SEIZE OF STEEL PLANT WITH NAVEEN PATNAIK. THEREFORE MOUS ARE NOT SACROSANT
AND LEGALLY NOT BINDING ON ANY PARTY.
If any one has any question they are free to put.

Srikant Jena

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