Monday, February 6, 2012

Government losing precious foreign exchange

By HH Mohrmen

The Tamabil Dawki Land Custom Station (LCS) in the Amlarem sub-division of Jaintia hills district is a major land port and one of the oldest in the Northeast. With coal and limestone being the main products of the district it is not surprising that the major exports of India through the Tamabil Dawki LCS are the above minerals. The sad fact is that government is losing millions of dollars in foreign exchange exporting coal to Bangladesh from this port. A surprise visit to the port made one realize the truth that exporting minerals particularly coal has not benefited the state exchequer but only the exporters. In the process the state is losing huge amounts in foreign exchange and taxes. It is pertinent to examine these facts while the country is celebrating the golden jubilee of the Central Customs Act, 1962.
The state exchequers of both state and central government are made poorer in the process of exporting minerals from the District and this happens in broad day light. The officials of both the central and the state government turn a Nelson’s eye to what goes on at the port. This scribe visited Tamabil on December 7, 2011 and interviewed some of the truck drivers. One Leaderwell Dkhar said that the actual load the truck carries is 16 tons but when asked to produce documents for exporting coal to Bangladesh, the papers from the Meghalaya Directorate of Mineral Resources including receipts from the weighbridge shows that the truck carries a shipment of 9 tons only.
Another driver S. Dhar confided that the truck he drives carried 18 tons and some even claimed that they carry 20 tons but in paper all the trucks which pass through the Tamabil land custom stations are certified to be carrying 9 tons only as per the orders of the Supreme Court. The question is what happens to the excess coal exported to Bangladesh which does not appear in the books? The weight of the excess coal which is between 7 to 8 tons per truck passes through the port right in front of the nose of the police and the customs officials.
When asked by this scribe why the trucks were allowed entry despite violating the SC orders of the 9 tons limit, the answer I got was interesting. The policeman and Customs official who check the trucks before they proceed towards Bangladesh replied that their duty is only to check whether the trucks have all their papers in order and not to weigh the trucks. B Nongbri Customs officer in charge the Land Customs Station in Dawki (because the Superintendent M K Brahma is out of station) clarified that the duty of the Customs office is to facilitate trade through the port and also to ensure that no contraband is smuggled into India. When asked if he is aware of the Supreme Court order which prohibits trucks from carrying loads of more than 9 tons, Nongbri answered in the affirmative, but added that it is the duty of the District Administration to see the trucks are not overloaded beyond the permissible limit.
Trucks transporting minerals from this port, particularly coal are not only violating Court orders but the trade has brought a huge loss to the country in the form of foreign exchange. Nongbri also said that India is selling coal to Bangladesh at the rate of 50 US$ per ton and the average number of trucks passing through the Tamabil port is 450 trucks per day. Only 9 tons of coal per trucks is legally exported to Bangladesh with proper documents. The question is what happens to the excess coal which does not appear in any document? What happens to the 7 or 8 tons of coal per truck which is not accounted for? If one is to use a simple calculation to estimate the lost in foreign exchange from the illicit act, it will accrue to the tune of 157500 US$ (one hundred fifty seven and five hundred thousand dollars) per day. The calculation is arrived at by taking into account that only 7 tons of coal is carried in excess by each truck and according to the Customs officer the number of truck exporting coal to Bangladesh is average 450 trucks per day. At the cost of 50 US $ per ton, the total amount of foreign exchange lost comes to more than one hundred fifty thousand US$ per day, per month the loss in revenue to the central government in the form of foreign exchange is approximately 4725000 US$ ( 4.72 million US$) and if the amount is converted to rupees (@ of Rs. 45 to a $ it will come to the Rs. 21,26,25000 (Rs 21.26 crores per month). No wonder Tamabil Dawki does not appear in the list of the LCS which earns forex for the country.
Each exporter is issued a letter of credit of 100 tons. For every letter of credit and the cost of coal per ton as per letter of credit is 50 US$, but informed source disclosed that in the real trade coal is sold at the rate of 150-160 US$ per ton. Even on the 9 tons coal as appeared in paper, the rate at which coal is sold in Bangladesh is much higher than the rate specified in the letter of credit. Here again the question is how the excess money which does not appear in black and white, changes hands from the importer to the exporter? Talking of hawala and black money, there is so much of that is happening in Dawki.
A former exporter (who requested anonymity) revealed that sometimes the importers pay the excess amount illegally in rupees through the driver of the truck and sometimes the exchange is in gold. The exporter said that coal export from Tamabil Dawki started since the early eighties. Which means that the illegal practice of overloading trucks beyond the permissible limit has been going on for more than three decades! Hence, the amount of coal exported to Bangladesh from this port is more than what appears in paper. On December 8, a vernacular paper carried the news of trucks exporting coal from Tamabil land customs station to Bangladesh violating the Supreme Court order. A few days later the Customs office stopped the export of coal via this port. More than 700 trucks were stranded on the national highway 40 (E) because the Customs officials refused to allow any trucks carrying more than the permissible limit to pass through the port. In the evening of December 11 this journalist spoke to M K Brahma Superintendent of Customs Tamabil Dawki, and asked him the reason why the trucks were stranded. Brahma informed that his office has asked the trucks to unload the excess amount and his office will not allow trucks carrying more than 9 tons to pass through the Dawki port. Next day this writer again called M K Brahma and was informed that arrangement has been made with the exporters and their overloaded trucks were allowed to pass on condition that from the next Monday the Customs office will maintain strict vigil so that no trucks carrying more than 9 tons will be allowed to pass through this port. Instead, now, truck drivers are pressured by the exporter to carry 20 or more tons per trip.
The State of Meghalaya is also losing revenue in the form of royalty collected from coal produced by the state. Royalty from minerals produced by the state is shared between the state government and Jaintia Hills Autonomous District Council in the ratio of 60:40. The state is collecting royalty of Rs. 290 (rupees two hundred ninety) per ton from coal exported from the District, but thanks to the illicit connivance of the government officials, the state is losing royalty of Rs. 2030 (rupees two thousand thirty) per truck from the 7 tons excess weight carried by every truck which does not appear in paper.
It is also ironic that a port which trades hundreds and thousands of dollars per day does even have a proper weigh bridge. Till date the measurement in done in archaic volume metric or cubic meter system that too in Bangladesh and not in India. Former exporters informed that till 1997 both the exporters and the importers conducted a joint measurement to ascertain the weight of the consignment and this continues in the Borsara LCS till date, but for reasons best know to the government officials in the port, the process was discontinued.
The export of minerals particularly coal from Tamabil Dawki Land Custom Station is in complete disarray. The government both at the state and the Centre should do something immediately to address this problem and solve the quagmire.

No comments: