Misuse of the Indian railways’ dual policy for Iron ore export
The unearthed Iron ore railways scam took a new twist when a multinational steel maker negotiated the penalty charged by Indian railways for alleged Iron ore export. Essar proposed a counter offer of INR 890 millions to the penalty of INR 1.17 billion charged by Indian railways and conveyed that the offer is negotiable. The company was alleged of paying cheap domestic tariff for transportation of Iron ore and Iron pellets which were meant for exports.
The Comptroller and Auditor General (CAG) had disclosed the iron ore export scam on September 8, 2013, that revealed a loss of around INR 170 billion to the railways. The exporters misused the dual policy of railways which defines the charges for domestic transportation and export of Iron ore. The Iron ore was allegedly exported at the domestic rates instead of the export rates fixed by the government. The railways had introduced its new policy during May-July 2008, according to which transporting Iron ore and Iron pellets for domestic use was cheaper and its export was four times higher. The cheap domestic rates were however to encourage Indian local industries of Steel, Iron and Cement.
Essar Steel requested for railways permission to pay the penalty in 18 equal installments. They also assured of paying the installment on the 7th of every month in the next eighteen months and might have even paid their first installment according to the sources.
The step taken by Essar Steel is in contrast of the steps of other alleged companies who have filed case against railway for charging penalty against them. The railway scandal of iron ore export is now under strict surveillance of CBI.
According to the railways sources, “this could be the single-biggest recovery from a private entity by the state-run transporter against freight evasion.”