Aiming to reduce the financial burden on Coal India ltd (CIl) - which is next in line on the Centre’s disinvestment agenda - the Coal Ministry has indicated that it will go with a Parliamentary panel’s recommendation which had suggested removal of the provision of 26 per cent profit sharing by coal and lignite miners with project-affected people and replacing it with a system based on royalty payments by the concerned firms.
According to sources, the Coal Ministry is learnt to have decided to go with the suggestion of the Parliamentary Standing Committee on Coal and Steel and has fixed 26 per cent of the total royalty to be paid during the financial year, as the stipulated sum to be given as compensation to the affected populace.
The proposal may go to Cabinet soon, sources privy to the development, told The Pioneer. The decision by the Coal Ministry has mainly been influenced by the fact that CIl’s disinvestment is on the cards within this fiscal and payment of 26 per cent of amount as compensation from its profit would burn a hole in its pockets.
At the same time though, it may not find it that hard to earmark 26 per cent of amount as compensation from the royalty which it has to pay to the respective State Governments for mining coal from their areas. The Standing Committee had suggested that “in case of coal and lignite, the mechanism for payment to District Mineral Foundation (DMF, the fund where the compensation amount is to be deposited) on the basis of royalty paid during the financial year may be worked out instead of an amount equal to 26 per cent of the profit.”
Incidentally the Parliamentary panel headed by Trinamool Congress MP Kalyan Banerjee had suggested this amendment in the Bill on the request of the Coal Ministry itself. The ministry had sought amendment in the 26 per cent profit sharing clause for coal and lignite companies proposed by the Mining Bill 2011. The Coal Ministry, sources said, is learnt to have accepted the panel’s suggestion and fixed 26 per cent as the percentage which should be given as compensation amount.
The committee, which had made these recommendations during its report on the Mining Bill submitted in Parliament during the Budget session earlier this year, had further suggested that DMF should be brought under the CAG audit purview. It had asked the Government to increase the representation of the local community in the DMF council.
The Mining Bill had suggested that non-coal and non-lignite companies should pay an amount equivalent to annual royalty paid by them to state governments, to affected locals. The Mines and Mineral (Development and Regulation) Bill, 2011 also popularly known as the Mining Bill, seeks to replace a more than half-a-century-old law under the same name and was tabled in Parliament in December, 2011. later, it was sent to the Standing Committee.
The Standing Committee, which has suggested extensively changes in the entire Bill, has taken a lot of time in whetting the legislation, thus consistently postponing its re-introduction in the Parliament. Among other suggestions, it had recommended that the state governments should get free hand in deciding state level cess on the miners. The panel had said that present provisions of fixing the rate of cess not exceeding 10 per cent of the royalty is “interfering” with the right of State Government.
The panel has also advocated addition of a provision in the new Mines Bill “whereby no extra or any weightage is assigned by the concerned states for setting up of industries in that state only” while allocating the mineral concessions. This would help in overcoming region disparities and promote development across regions/states in setting up of mineral based industries, the Committee had said in its report.