Royalty suggested as basis for benefit sharing by coal companies

New development expected to cheer miners industry, which has been opposing the move saying profit sharing clause would take a toll of about Rs 15,000 cr

A standing committee of Parliament has proposed doing away with a clause in the proposed mining Bill which had mandated coal and lignite companies to share 26 per cent of their profit with local communities impacted by mining operations.

It, instead, suggests royalty paid during the financial year to the state government should be the basis for benefit sharing.

This forms part of the committee's report on the Mines and Minerals (Development and Regulation) Bill, 2011, meant to replace the 50-year-old Bill for the sector.

This development is expected to cheer the mining industry, which has been opposing the move, saying the profit sharing clause would take a toll of about Rs 15,000 crore.

The ministry of mines said the government had considered the option of 26 per cent of shares to the affected persons but the proposal was found non-feasible due to the complexities involved in the distribution of shares and in calculation of profits.

The draft Bill also provides that at least one share will be allotted to every person affected by mining operations.

However, the committee in the report said the number of shares allotted to each person should be linked with the quantity of land put to use for mining operation and transfer allowed, too.