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HT Special | E­-tendering process flawed, sand, gravel prices to go up

The Punjab government’s move to auction 59 sand and gravel mines under the Punjab Miner Mineral Rules, 2013, will neither benefit the state government nor the consumers as the prices are likely to shoot up due to the flawed tendering process.

punjab Updated: Apr 11, 2017 09:06 IST
Vishal Rambani
Vishal Rambani
Hindustan Times, Chandigarh
E­-tendering,Punjab Miner Mineral Rules,Punjab government
The 59 mines to be auctioned on April 18 have a total area of 271 hectares.(HT File Photo)

The Punjab government’s move to auction 59 sand and gravel mines under the Punjab Miner Mineral Rules, 2013, will neither benefit the state government nor the consumers as the prices are likely to shoot up due to the flawed tendering process.

According to sources, the state is likely to earn between Rs 20 crore and Rs 25 core from the auction this fiscal, which is less than the revenue generated (Rs 37 core) during the Akali Dal-BJP government’s regime last fiscal.

The e-tendering process conceals more than it reveals. Though department has termed it an auction, it seems like a “draw of lots”, which is neither favouring the government nor consumers, but benefiting the mining mafia, say sources.

Tightening the noose around the mining mafia was one of the pre-poll promises of the Congress government. During the election campaign, Captain Amarinder Singh had termed mining a Rs 1,000-crore loot, with the state getting only between Rs 37 crore and Rs 40 crore revenue per year.

  • The department has allowed extracting 26.85 lakh tonnes of sand and gravel in 59 mines. Every 100 square feet of gravel weighs approximately 4 tonnes. And each truck of 800 feet gravel weighs around 35 to 40 tonnes.
  • This means only 200 to 250 truckloads of sand and gravel will be extracted every day. However, more than 1,000 truckloads of sand and gravel are extracted in Pathankot districts alone per day.
  • This will benefit the mining mafia as the government will get revenue for only 28.65 lakh tonnes, while actual mining will be 10 times more, say officials.

The 59 mines to be put on auction on April 18 have a total area of 271 hectares and the government has allowed digging out 26.85 lakh tonnes of sand and gravel. The auction is likely to fetch Rs 40 crore, but the government will get only around Rs 20 core to Rs 25 crore while the rest will go in the pockets of mining contractors and land owners as compensation.

The department has fixed reverse auction (where several sellers offer their items for bidding and compete for the price which a buyer will accept) this year against the previous government’s policy of incremental auction (the minimum amount an auction bid must be raised each time the current highest bid is surpassed. The increment is determined by the value of the most recent bid). This means fixing the selling price at the pit head.

For this, the department has adopted a formula in which government royalty will be Rs 30 (per tonne), district mineral foundation fund Rs 10, compensation to land owner Rs 50, labour charges Rs 25, environmental clearance expenses, weigh bridge expenses between Rs 30 and Rs 55, and profit Rs 10 per tonne, to calculate a selling price of the raw material. Out of this, the government will only get royalty, district mineral foundation fund, environmental clearance expenses (from 75 paisa to Rs 5.07 maximum per tonne), and environmental fund, which is 10% of the royalty. On the other hand, mining contractors will get labour charges, weight bridge charges, profit, and even compensation if they strike a deal with land owners.

  • The Punjab government has formed a committee under finance minister Manpreet Singh Badal to draft a new mining policy within a month, then why the department is in a hurry for auction 59 mines?
  • Though department has opted for e-auction, the tenders are in Punjabi only. This has been done to stop participation of bidders from other states

The department has put another rider that one can’t bid less than the selling price fixed by government. “In the reverse bidding, there is no provision to bid below the selling price fixed by department. Those who will bid the lowest price (equal to fixed price), will be treated as L1 and there will be a draw of lot of all L1 bidders,” said a mining department official.

“The Congress government will not be able to generate more revenue from the auction than the previous SAD-BJP government. Then why was the Congress alleging scam in the past? It’s now for the Congress leadership to clarify that either there was no scam in past or admit that they are also committing the same fraud,” said a bureaucrat, requesting anonymity.

State mining department director Amit Dhaka also admitted that sand and gravel prices will soar for the time being. “The prices will come down once the department auctions another 50 mines in the next two months. The policy is aimed at curbing prices at the pit head or the mining area. That’s why the prices have been fixed. If we go for incremental bidding, the prices will rise further.

First Published: Apr 11, 2017 08:55 IST