Is Modi Government Planning on Selling State Govt. Owned Mineral Resources to Corporates?

News Click | Ayaskant Das | Feb 17, 2021

A draft notification by the Ministry of Mines says mineral blocks not auctioned by state governments can be auctioned by the Centre.

New Delhi: In an attempt apparently aimed at helping corporate houses appropriate a greater pie of natural resources of the country, the Modi government has proposed a law whereby the Centre can auction mineral blocks that belong exclusively to states. On February 9, the Union Ministry of Mines had issued a draft notification proposing a series of mining reforms, including the transfer of rights to auction mineral blocks to the Central Government.

The Mines and Minerals (Development & Regulation) Act, 1957 will be amended to “provide the power to central government to conduct auction (of mineral blocks) in cases where the State governments face challenges in conduct of auction or fail to conduct auction”. Among other reforms, the government has proposed to allow commercial trading of up to 50% of coal extracted from blocks allocated exclusively for captive mining. The Centre has also sought to do away completely with the mandatory requirement to conduct fresh assessments and obtain new clearances whenever successful new bidders take over mineral blocks from old leaseholders.

Even though the draft notification makes it amply clear that all proceeds from auctions of mineral blocks by the Centre will fully accrue to respective state governments, it is being claimed that the proposed legislation undermines the federal structure of the country: state governments not only own minerals (except coal and uranium) but are also fully empowered to decide when and how to utilise those resources.

Experts have questioned the intention of the Central Government in bearing the costs and rigours of the auction process if all proceeds will ultimately accrue to state governments. “State governments are trustees of mineral resources. They can use the power at their disposal to auction mineral blocks in accordance with their own needs,” said senior Supreme Court lawyer Sanjay Parikh.

The ministry has justified its proposal to take over the power of auctioning all blocks on the grounds that state governments have displayed tardiness in selling minerals. The notification stated that Central Government exploration agencies have – since the year 2015 – handed over geological reports for 143 mineral blocks which are ready for auction to various state governments.

However, only seven blocks from this list have been auctioned so far. The draft notification also stated that leases of 334 mineral blocks, out of which 46 were working mines, expired in March 2020. However, despite repeated prodding by the Centre, only 28 of those blocks had been auctioned by the states so far, it said. The idea to auction a greater number of blocks on a regular basis has been justified on the basis of the assumption that this will ensure continuous supply of minerals in the country. It has further been reasoned that a delay in conduct of auctions has a substantial impact on the availability and prices of minerals.

“Where will the concept of inter-generational equity go if all mineral resources are auctioned together? Mineral resources have to be extracted in a very reasonable manner in accordance with our requirements. Otherwise it will lead to zero balance of resources for future generations. In the past there have been instances of fake letterhead companies buying over coal blocks even if those firms had no involvement in manufacturing activities of any nature. Immediate and wholesale auction of mineral blocks will result in precious natural resources going under the control of only those corporate houses who not only have very deep pockets at the moment but also have the power to compete for bids. There will be manifold adverse impacts on the local environment too if, by any imagination, all mineral blocks are subjected to extraction at the same time,” Parikh told Newsclick.

It has been speculated that any attempt by the Centre to take over powers of state governments, as far as ownership and management of mineral resources are concerned, will be vehemently opposed. In the wake of an attempt by the Central Government to undermine federalism, which forms a basic structure of the Constitution of India, it is likely that state governments would challenge the amendment in court, thereby resulting in a complete derailment of the mineral block auction process. On the other hand, an alternative exists for the Centre in the form of extending assistance to states for conducting e-auctions, which is a faster and cost-effective process if at all there exists the need to sell more mineral resources.

In the proposed amendment to the Act, a provision has also been made to allow leaseholders of captive mines to sell up to 50% of minerals extracted in any particular year, after meeting end-use requirements, provided that an additional royalty, as prescribed by the Central Government, is paid. In continuation of this provision, captive coal block leaseholders will now be able to use 50% of extracted minerals for commercial trading. This proposal has been justified by the Centre on the assumption that it will reduce the import bill of coal and help bridge India’s trade deficit.

“There are numerous thermal power plants in India that have been designed to operate only with imported coal. Many plants are strategically located along the country’s coastline for easy availability of imported coal through the sea route. These plants can never switch to domestic coal. Further, there is no reason why the government should charge additional royalty for coal (or any other mineral) that is commercially traded after meeting end-use requirements. It will lead to an artificial increase in the cost of minerals and the burden of additional royalty will ultimately be transferred to the consumer. This goes against the spirit of Atmanirbhar Bharat. If at all, the government should withdraw all captive conditions from upon existing leaseholders,” said R.K. Sachdeva, former advisor (Coal) to the Government of India.

In March last year, soon after a total lockdown was imposed across the country on account of COVID-19, the Central Government had issued a notification giving a two-year holiday for new mining leaseholders wherein they could continue extracting minerals on the basis of old clearances provided they obtained new clearances by the year 2022.

The new draft notification proposes to completely do away with the requirement of obtaining new clearances: the old set of clearances can be used by new leaseholders till all resources are exhausted in the mineral block. It stated that new leaseholders are “facing difficulties” in obtaining fresh clearances which not only happens to be a “lengthy process” but is also “time consuming”.

“The proposal that no fresh clearances are required for new leaseholders is pro-industry and pro-development. Any break in mining operations for the sake of new clearances would have led to a discontinuity in business. Mine operators would have had to begin the entire exercise afresh after getting new clearances. It would have become difficult for mine operators to find ore again,” added Sachdeva.

Sections of the industry have welcomed the move to continue extraction on the basis of old clearances even though those pertaining to environment and forests are not within the domain of the mines ministry.

“An environmental clearance, once granted, is valid irrespective of change of ownership of a mine. But consent for establishment and operations have limited validity and need to be renewed periodically. These cannot be bypassed. Further, any mining plan approved by the Indian Bureau of Mines does not come with a lifelong validity. It has to be reviewed every five years. Each project proponent has to submit mining plans for the next 20 years, including a closure plan. The Indian Bureau of Mines reserves the right to revoke a prior approval in the event of deviations from the original plan,” said Rebbapragada Ravi of mines, minerals & PEOPLE, an alliance of individuals, institutions and communities affected by mining.

Questions have also been raised about the issue of the safety of workers engaged in mining activities while allowing continuous extraction on the basis of old clearances. Shouldn’t safety standards be reviewed periodically as leaseholders dig deeper into the earth to extract minerals? The Directorate of Mines Safety reserves the right to cancel operations in the event of safety norms not being followed properly or being violated intentionally.

Further, there exist a certain set of mining clearances that are granted by state governments including handing over of the lease itself, through agreement, by the respective Directorate of Mines & Geology. “If there is any change in ownership, the new leaseholder has to sign a fresh agreement with new terms and conditions. This includes the amount of royalty and also the issue of mining permits at regular intervals. Any extension of mining lease or change in ownership has also to be done through issue of government order by the concerned department which cannot by bypassed,” added Ravi.

Need to prioritise sustainable living to protect planet: expert

The Hindu | February 15, 2021

‘Planned urbanisation in countries such as India could serve as a great adaptation method’

Climate change and urbanisation are two of the most important phenomena facing the world today and they are inextricably linked, observed Fulbright fellow in Environmental Studies at Yale University (USA) Suman Chandra.

She participated in the discussions during the national webinar on ‘Climate Change Adaptation: Traditional Wisdom and Cross-Scale Understanding,’ jointly organised by GITAM School of Gandhian Studies and United States India Education Forum (USIEF), here on Monday.

She pointed that India ranks fourth in the list of countries that produce highest greenhouse emissions and this could be a result of massive urbanisation.

Ms. Chandra, who earlier served as District Collector of Buldhana district in Maharashtra, emphasised that we are on the cusp of a rapidly changing world and we need to prioritise sustainable living and make it a part of our lifestyle in order to protect the planet. She suggested that a planned urbanisation in countries such as India could serve as a great adaptation method.

A. Rama Mohan Reddy, former forest service officer, who extended his services in the Himalayan region, focussed on the impact of climate change on forests which include frequent fires, unforeseen floods, untimely flowering of various plant species and the likes. He also spoke about various measures taken by the Forest Department to mitigate the long-term effects and to improve forest cover.

Visakha Society for Protection and Care of Animals (VSPCA) member Priya Tallam spoke about resilience in coastal communities and various activities undertaken by the VSPCA towards the betterment of the ocean and the marine life along the coast of Visakhapatnam.

The panel of speakers included IIM (Ahmedabad) Professor Rama Mohan Turaga, Samata Executive Director Ravi Rebbapragada, Ashoka Trust post doctoral research associate Vikram Aditya, Tata Institute of Social Sciences (TISS) researcher Bijayashree Satapathy and Stanford University researcher Krti Tallam.

AP Bauxite issue: A deep mine of tribal unrest, biz interests, eco concerns

The Federal | Suresh Dharur | Dec 26, 2020

Repeated attempts by successive governments in the past to take up bauxite mining in Visakhapatnam district had triggered anger among tribals. In fact, it has remained a political issue for long

Bauxite mining in Andhra Pradesh has been a touchy political issue for decades because of its far-reaching implications on environment and the livelihood of tribal communities.

The repeated attempts by successive governments in the past to take up bauxite mining in Visakhapatnam district had triggered anger among tribal communities. In fact, the issue was one of the key rallying points for the opposition parties as well.

Soon after taking over the reins of the state in May last year, Chief Minister YS Jagan Mohan Reddy ordered the withdrawal of a Government Order (GO) on bauxite mining and assured the tribals that his government would not take up mining in the district, which is a part of the environmentally fragile Eastern Ghats.

Back-door entry

However, the controversial issue is back in limelight with environmentalists and opposition parties expressing fears that the government was trying to facilitate a ‘back-door entry’ for mining magnets in the region.

The reasons for new apprehensions are not far to seek: The YSR Congress government is preparing the ground for allowing commencement of operations of alumina refinery in the district by Anrak Aluminium Ltd.

The ruling party’s parliamentary wing leader V Vijayasai Reddy publicly stated that the private refinery would be allowed to operate with bauxite ore to be sourced from Odisha and abroad.

This statement has triggered fears that the government was ‘stealthily preparing the ground’ for bauxite mining in the state.

“We will not allow bauxite mining at any cost,” said Ravi Rebbapragada, the executive director of Samata, a local NGO which has been waging a prolonged legal battle against mining in the region.

The Supreme Court had in the past made it clear that either the State, its instrumentalities or the tribal themselves forming into cooperatives have right over forest resources in the scheduled areas.

Though Anrak Aluminium Ltd, a joint venture of Ras-al-Khaimah Investment Authority (RAKIA) and Penna Group, completed the works on the 1.5 million tonne refinery long ago with an investment of Rs 5,000 crore to Rs 6,000 crore, it could not start operations for want of bauxite ore. The refinery is located in Makavarapalem mandal, about 80 km from Visakhapatnam.

In the combined Andhra Pradesh, the then Congress government, headed by Jagan’s father YS Rajasekhar Reddy, had decided in 2005 to allot bauxite mining to AP Mineral Development Corporate and supply the ore to Jindal South West Aluminium Ltd and Anrak Aluminium Ltd, floated by Ras-al-Khaimah Investment Authority (RAKIA) and its Indian partner Penna Group.

However, the MoU was cancelled in 2015 following widespread protests from tribal groups and the opposition parties. This led to the filing of an international arbitration by RAKIA against the Centre and state governments. The government recently formed a committee with senior officials to arrive at an out of court settlement with Anrak.

“There was no provision for arbitration in the agreement. The private operator should be allowed in the mining and refinery areas keeping in view the environmental pollution,” the former union energy secretary and noted environmentalist E A S Sarma said.

“The refinery will cause damage to the environment. Any attempt to start it will face stiff resistance from people,” warned the local CPI (M) secretary K Lokanadham.

Independent probe

Sarma sought an independent investigation by Anti-Corruption Bureau (ACB) and Special Enforcement Bureau (SEB) into the alleged illegal mining of bauxite in East Godavari and Visakhapatnam districts.

“I have been cautioning the government about private individuals and companies extracting bauxite in the guise of laterite. It may be noted bauxite mining is restricted to the public sector and to tribal cooperatives as directed by the Supreme Court in the Samata judgement years ago,” the retired IAS officer said.

In a bid to circumvent this restriction, the private miners, in collusion with the local mining officials, have been producing false analysis certificates to show that the bauxite they are extracting and exporting to alumina refineries is indeed laterite.

As per the Indian Bureau of Mines (IBM) report, any aluminous mineral ore containing more than 30 per cent aluminium is defined as bauxite.

However, the State Mines department has been granting leases for “laterite” mining, thus allowing the miners to go scot-free, Sarma pointed out. He alleged that many mining leases granted in Visakhapatnam and East Godavari actually involved illegal bauxite extraction.

As per the original plan, drawn up in 2005, the state-owned APMDC was to undertake the mining in 1,212 hectares of reserve forest area in Chintapalle and Jerella blocks of Visakhapatnam district.

However, the subsequent governments chose not to go ahead with the proposal due to widespread opposition in the region.

“Minerals like bauxite/alumina are scarce resources. Aluminium is a strategic metal that is used widely in the aviation industry and other manufacturing processes in the west. The price at which Indian miners export alumina is several times lower than the global price, which implies enormous scope for corruption and black money generation,” Sarma said.

Centre Signals Over Rs 35,000 Crore Fund Cut for Polavaram Project, Affected Families Still Await Compensation

News Click | Prudhviraj Rupavath | Oct 24, 2020

As per government records, just less than 4% rehabilitation works have been completed in the last six years.

Hyderabad: The Union Finance Ministry has reportedly said that it will only sanction the project cost of Polavaram irrigation project at the 2013-14 price level which was Rs Rs 20,398.61 crore against the revised cost estimates of the Polavaram Project Authority (PPA) at the 2017-18 price level (Rs 55,548 crore) which was also approved by the Union Jal Shakthi Ministry. In other words, the finance ministry has signalled that there will be a fund cut to the tune of about Rs 35,150 crore.

While the YSRCP led Andhra Pradesh state government is yet to respond on the differences between the union ministries and the cut in project funding, activists are sensing a political conspiracy in the state which will not just delay the construction of the project but worsen the situation of lakhs of project oustees who are awaiting the government compensation for their villages, agriculture and forest lands acquired for the project.

Reportedly, Union Finance Minister Nirmala Sitaraman told Andhra Pradesh Finance Minister Buggana Rajendranath Reddy on Friday, October 23, that the Centre will reimburse only Rs 7,053.74 crore, which is pending as per the project cost at the 2013-14 price level.

“It seems like the central government is signalling that it would further delay the project, perhaps for the benefits of its party’s politics in the state,” said J Babjee, state secretary of Andhra Pradesh Vyavasaya Vruthidarula Union (APVVU), who has been organising the project affected families for claiming their legal rights. “But, the project affected families will be devastated as they have been waiting for compensation for years as they were not even provided with alternative livelihood sources,” he said.

In 2014, the Polavaram multipurpose irrigation project was declared as a national project during the bifurcation of erstwhile Andhra Pradesh into two states. The previous Telugu Desam Party government in the state took over the responsibility of the execution of the project as agreed by the Union government. The project cost was revised several times in the last 10 years both under the United Progressive Alliance and the National Democratic Alliance led governments.

In March, the Union Jal Shakti Ministry stated in Parliament that out of 1,05,601 Project Displaced Families of Polavaram project, rehabilitation and resettlement (R&R) works with respect to only 3,922 families has been completed.

Notably, 50% of the affected people are adivasis belonging to Koya and Kondareddy communities, and nearly 30% of the remaining belong to Scheduled Castes and Other Backward Castes.

After coming to power in 2019, YSRCP led government under Chief Minister Y S Jagan Mohan Reddy had called for reverse tendering of the Polavaram project and also enhanced the compensation to be provided for the project oustees.

In September last year, infrastructure major Megha Engineering and Infrastructure Limited (MEIL) acquired the contract for construction of the irrigation project including hydel power project for Rs 4,358 crore through a reverse tendering process called by the state government.

“In spite of being aware of the developments in the state concerning the project cost, the Centre has remained silent and is now reversing its own ministries approvals,” said Babjee, while expressing concerns about a “political conspiracy”.

As per the government records, less than 4% of the rehabilitation works have been completed in the last six years.

Further, in August 2019, the YSRCP government through a government order (GO) number 350 has enhanced rehabilitation entitlements for project affected families ensuring Rs 5 lakh more compensation and additional 25% benefits for SCs, STs living in the scheduled areas.

“Non implementation of the GO Ms No 350 will amount to breach of contract on the part of the state government,” said Babjee.

NewsClick has earlier reported that the recent floods this year in East and West Godavari districts have devastated thousands of families including those living in the Polavaram region.

The project affected families have also led numerous movements for compensation against over 51,000 acres of community forest land which was acquired from Tribes for Polavaram project.

Left Protests Against Andhra Govt’s Gross Negligence of People Affected in Godavari Floods

News Click | Prudhviraj Rupavath  | Sep 02, 2020

Only 3,922 out of the one lakh families displaced by the Polavaram Project have been rehabilitated until now, and the rest have been heavily affected by the ongoing floods.

Hyderabad: Demanding compensation for the thousands of families affected in the River Godavari floods in August, and rehabilitation for the Polavaram project affected families, Communist party of India (Marxist), [CPI(M)] and its affiliated organisations held protest demonstrations across several mandals in West and East Godavari districts in Andhra Pradesh on Wednesday, September 2.

Reportedly, the Godavari witnessed nearly 22 lakh cusecs per day flood flow in the third week of August. Left party leaders who have recently visited the flood affected regions told NewsClick that the floods have resulted in the evacuation of about 17,000 families from 100 villages in Godavari districts.

“The gross negligence of the state government in failing to provide adequate rescue and rehabilitation arrangements in the flood prone area has pushed thousands of families in agency areas to shift to hill tops to take shelter,” said J Babjee, state secretary of Andhra Pradesh Vyavasaya Vruthidarula Union (APVVU), a trade union of agricultural workers, marginal farmers and fisher people in the state.

“Hundreds of houses have been submerged in the floods, road connectivity to numerous mandals has been damaged, power supply has been affected, agriculture crops have been damaged, and even the government’s ration supply has not reached many villages, leaving many families in dire situation. But the government has announced just Rs 2,000 per family as compensation, which reveals their negligence,” said Babjee.

CPI(M) state secretary P Madhu visited the affected villages on Wednesday and gave a protest call, demanding compensation and rehabilitation across revenue offices in the two districts on September 5.

“Most families have run out of rice, fuel and groceries, etc., supplied by the authorities,” said A Ravi of West Godavari district, who participated in the protest.

Polavaram project affected families who have been awaiting rehabilitation have also been severely affected in the recent floods. “Evidently, the governments are interested in completing the project but not in ensuring proper rehabilitation to the affected families,” said P Madhu.

The Polavaram project affected families have been demanding fair compensation as per the provisions under Land Acquisition Act, 2013 for years.

The project was granted national status (full cost to be borne by the Union government) by the UPA II government through the AP Reorganization Act, 2014. After the YSRCP led government under Chief Minister Y. S. Jaganmohan Reddy came to power, the authorities called for new tenders for project work under reverse tendering process, and subsequently Megha Engineering and Infrastructure Limited (MEIL) grabbed the project.

In February, 2019, the Technical Advisory Committee of the Union Jal Shakti Ministry gave clearance for Rs 55,548 crore revised cost estimates of the project.

As per the government records, so far, only 3.7% of the rehabilitation works have been completed.

In March, Union Jal Shakti ministry stated in the parliament that out of 1,05,601 Project Displaced Families of Polavaram project, Rehabilitation & Resettlement (R&R) works in respect of only 3922 families has been completed.

Observers argue that 50% of the affected people are Adivasis belonging to Koya and Kondareddy communities. And nearly 30% of the remaining belong to Scheduled Castes and Other Backward Castes.

“The resettlement colonies being constructed for project affected families are lacking basic amenities and facilities which are to be provided as per the land acquisition Act,” said Babjee. He added that hundreds of Adivasis who were having community land rights titles under Forest Rights Act were not compensated.

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