Coal Min suggests per tonne levy

The coal ministry has proposed that the Centre notify an amount to be charged from captive coal miners for compensating local people for the damage arising from mining projects. The amount could be levied on every tonne of coal produced by these miners.

The amount would be based on the rupees per tonne basis, on an average of 26 per cent profit notified by Coal India Ltd and Singareni Collieries Company Ltd (SCCL) every year.

The formula has been proposed even as the Cabinet has approved a draft of the new mining legislation which will introduce a benefit-sharing regime for the mining industry. At the current level of profits, the levy works out to about Rs 65 on every tonne of coal mined.

 

The ministry of coal has suggested that the 26 per cent profit-sharing by coal miners should be applied to Coal India and SCCL. Since captive coal miners do not engage in selling coal, the ministry has recommended that the government notify an amount against per tonne production for compensating the local people.

Under the Mines and Minerals (Development and Regulation) Bill, coal companies have to share 26 per cent of their profit for the benefit of local people.

The Bill does not make a distinction between captive and non-captive coal miners, but the coal ministry says captive miners being integrated set-ups with end-use plants would not be able to show separate coal mining profits, as the coal produced form allotted blocks would be consumed in their own end-use plants.

A senior executive in a power company has criticised the proposal, and argued if there is no profit being made on coal production there is no question of sharing.

“The entire production is being used for captive purpose and not for profiteering. It will hit us badly.”

In similar letters written to mines minister Dinsha Patel and finance minister Pranab Mukherjee, who headed a group of ministers on mining, coal minister Sriprakash Jaiswal said the section 43 in the Bill that prescribes profit-sharing would only impact CIL, SCCL and mining companies run by state governments.

“Other coal block allottees would escape any sharing of profits from the coal mining operations with the people affected by such coal mining,” Jaiswal said in the letters.

The current legal regime under the Coal Mines (Nationalisation) Act allows captive mining for specified use like power, iron and steel and cement production.

Another provision of the Bill, approved by the Cabinet on September 30, that the coal ministry wants to be changed is the one on the National Mining Regulatory Authority (NMRA). Section 43(2)(b) lays down that the Centre can revise the profit-sharing rate or specify some other method based on the NMRA recommendations.

Similarly, NMRA can also suggest changes in royalty rates. Stating that a separate regulatory regime for coal sector is in the works, the coal ministry wants coal and lignite should be excluded from the purview of this section.