Saturday, June 7, 2014

NEW DELHI  A multi-disciplinary criminal investigation led by CBI has estimated around Rs 4,000 crore loss to the railways in the iron ore transportation scam, in which several companies moved iron ore for exports by paying subsidized rate meant for domestic movement.

The estimate of loss is based on findings until now and is not final, sources said, hinting at the possibility of it going up further. The investigation findings ties in with what the Comptroller and Auditor General had estimated. In two audit reports, the CAG had estimated that railways suffered a revenue loss of around Rs 4,300 crore in 2008-12 because exporters misused the dual pricing for iron ore transportation.

The CAG had estimated a loss of Rs 2,487 crore in a report submitted in February, while it had estimated Rs 1,796 crore in its previous report. The federal auditor had estimated that railways could end up recovering Rs 15,540 crore as penalty from the exporters. It is an amount that can change the fortunes of railways, which is reluctant on any aggressive action against the cheating iron ore exporters.

The Rs 4,000 crore assessment by the investigation team, comprising CBI, customs, excise and railway representatives, is based on 13 FIRs filed till now. The investigation was ordered by Central Vigilance Commission which found a pattern in the fraud adopted by exporters, raising suspicion that it was a widespread criminal conspiracy.

Investigators have found the same pattern in the fraud, ever since railways notified in May 2008 a subsidized rate for domestic movement of iron ore, which was about one-fourth of the rate for exports. On an average, domestic freight charge per tonne was around Rs 300-Rs 400, whereas it was over Rs 2,000 per tonne for exports.

Most companies investigated availed a priority 'C' facility provided by the railways for allotment of rakes to encourage domestic movement of iron ore. In these rakes, iron ore was moved to various ports for exports. What added to the export craze was the huge demand from China for iron ore.

Informal estimates by railway insiders have said the railways could end up recovering up to Rs 50,000 crore from exporters who have misused the facility.

According to their figures, about 18 million tonnes of iron ore was annually exported, while claiming them to be for domestic use. At average revenue of Rs 200 crore for every million tonne of export, the total loss to railways annually is Rs 3,600 crore.

Annual revenue gain possible for railways, including penalty at four times the rate, is around Rs 18,000 crore. Based on this estimate, they argue that the revenue gain since 2008 for the railways could be around Rs 50,000 crore, an amount that could radically change the fortunes of the state-run transporte


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