Modi Govt to Reduce Penalty for Late Payment of Coal Royalties, Forest Diversion Rules Diluted

News Click | Ayaskant Das | 29 Jul 2022

Penalties for delayed payment of royalties will be halved; new rules allow bypassing Gram Sabhas before diverting forest lands.

New Delhi: Even as big corporate entities have queued up to acquire mining rights over coal blocks from which they can sell the extracted minerals at the highest prices, the Modi government has proposed to halve the penalty rate that is binding upon leaseholders for failing to pay their royalties in time. The existing rate of 24% interest against delay in payments of royalties or rents to the Central government against minerals extracted from coal mines will be reduced to 12%.

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Clear lacunae in MMDR Act: Experts

The Hitvada Business Bureau | June 29-06-2022
The MMDR Act has certain provisions which are not conducive to mining and the nation’s economy at large. As a result, a drastic fall is being witnessed in mining output, and also a significant drop in employment in the mining sector. While the aims were sound and noble, the lacunae that crept into the acts and laws have negated several aspects which are the very foundation of nobility that the sector could have stood on, said Shivkumar Rao, President, Vidarbha Economic Development Council.

VED members, Chairman of the VED Mining committee, B K Shukla and Committee senior member Arun Deoras, highlighted a few of the salient features that stand out as problems faced by the mining sector. Obviating these obstacles will be helpful in mining, making the auction process more dynamic and will create a win-win situation for the Govt. and miners, they felt. According to them, “mineable mineral reserves” vis-à-vis “estimated mineral resource” are creating problems. The expression “mineable mineral reserve” means the economically mineable part of an “estimated mineral resource” of an area.

However, an amount equal to 0.50% of the “sale value of the estimated mineral resource” is required to be paid as auction premium as upfront payment, reserve price for bidding, performance security, net worth requirement to determine the eligibility for participation in the auction (which varies from 0.5% to 2%) and registration charges for mining lease agreement.

When extraction of a mineral is possible only up to the “mineable mineral reserve”, certainly it is unfair and does not make sense to compel bidders to pay charges / processing fee based on sale value of the entire ‘estimated quantity of mineral resources,” they pointed out.

They suggested that taxes, charges, processing fee, security deposit should be levied for mineable resources of minerals. Under section 26 of MMDRAct-2015, both the Central Government and State Government are authorised to exercise powers conferred under MMDR Act-2015. It is suggested this section should also contain a time-limit for disposal or completion of the said subject matter.

Apart from this, the penalty prescribed in section 21 of the Act is too harsh when compared to the severity and gravity of the offence of the same quantum of punishment mentioned in other criminal laws.

Govt receives 38 bids for commercial coal mine auction

The Hindu Business Line | June 27, 2022

The online bids received for the coal mines will be opened on Tuesday (June 28).
The Coal Ministry on Monday said it has received 38 bids under three tranches of commercial coal mine auctions. The last date for submitting online and offline technical bids ended on June 27 and the online bids received as part of the auction will be opened from Tuesday.

“The Fifth Tranche, Second Attempt of Fourth Tranche and Second Attempt of Third Tranche of commercial coal mine auctions were launched by the Nominated Authority, Ministry of Coal on March 30, 2022,” Coal Ministry said in a statement.

Under the Fifth tranche of auctions, a total of 28 offline bids were received against 15 coal mines, where 2 or more bids have been received for eight coal mines, while under the second attempt of the Third tranche, a total of nine coal mines were put up for auctions and six bids have been received against six coal mines.

In the second attempt of the Fourth Tranche (auction), a total of 4 coal mines were put up for sale and four bids have been received against 3 coal mines, the ministry said.

The Centre launched the actions for commercial coal mining in June 2020 under the CMSP Act and the MMDR Act. Under the commercial coal mining auction process, around 42 coal mines have been successfully auctioned so far with a total cumulative PRC (peak rate capacity) of 86.404 million tonnes per annum (MTPA).

The ministry’s view is that a coal mine auction for the sale of coal would drive competition and adopt best practices in mining as well as environment management. Auction of coal mines in a transparent manner is expected to encourage transparent pricing of coal, based on market forces.

The demand for coal is higher than the current level of domestic supply of coal in the country. The gap between demand and domestic supply of coal cannot be bridged completely as there is insufficient availability and reserve of prime coking coal.

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