Lack of control on revenue leakage continues in Goa’s mining sector: CAG report

The report covered Goa’s accounting practices for both minor minerals – basalt, laterite and sand, and major minerals – iron ore, manganese ore and bauxite

Goa’s mining sector continues to be plagued by the lack of controls and mechanisms to prevent revenue leakages that marked the period of unabated illegal mining which led to its stoppage back in 2012, a report on asset accounts on mineral energy resources by the Comptroller and Auditor General (CAG) has found.

A mine in Goa. (Mint File Photo)

The report, published in July 2023 and overseen by the Government Accounting Standards Advisory Board (GASAB), covered Goa’s accounting practices for both minor minerals – basalt, laterite and sand, and major minerals – iron ore, manganese ore and bauxite.

“The lessees, based on their own assessment of quality of ore, declared the percentage of lumps and fines in ore and paid royalty at applicable IBM rate for the declared grade of the ore. There was no system for counter-checking the correctness of such declarations made by the lessees. As the onus of declaring the grade of the ore is on the lessees and they remitted royalty accordingly. Declaration of incorrect grade may impact the royalty revenue to the government,” the report stated, adding that the Directorate of Mines and Geology (DMG) “needs to put in a mechanism for drawing samples from the extractions for assessment of the quality of the ore and verify the correctness of the percentage of lumps and fines declared by the lessees in order to ensure that royalty remitted by lessees are at an appropriate rate and there is no leakage of royalty revenue to the government.”

The CAG in its report has called on the DMG to put in place an automated system to capture the data of supply/dispatch of resources linking the data for use of various agencies such as weigh-bridges, mobile checking, geo- surveillance, check-posts, exit gates, railway sidings, resellers, user agencies, industries, etc.

“The system should provide for drawing samples from the extractions of minerals for assessment of the quality and grade of minerals and verify the correctness of the percentage of lumps and fines declared by the lessees in order to ensure that royalty remitted by lessees are at appropriate rate,” the report recommended.

Goa is set to resume mining after a gap of more than a decade, save for a brief period from 2016-18 when some mines that received ‘renewals’ resumed operations, with the government holding auctions for several blocks of iron ore leases since December last year.

Goa director of mines and geology Suresh Shanbhogue said the recommendations would be implemented no sooner mining restarts in the state.

“At the moment, there is no production in Goa. The report has made some general recommendations. When mining restarts, we will make sure they are implemented,” Shanbhogue said.