Odisha slams coal royalty revision

Odisha expects to garner additional revenue of Rs 100-Rs 150 crore following revision of coal royalty approved by the Cabinet Committee on Economic Affairs (CCEA).

“The state government had demanded that coal royalty be fixed at 20 per cent of market price of the dry fuel. But the CCEA has fixed it at 14 per cent on ad valorem basis. We don't think the move is going to benefit Odisha in a big way considering that mostly low grade coal is produced in the state. Every year, the state earns around Rs 900 crore by way of coal royalty and the revision can only add Rs 100-Rs 150 crore to the state's coffers,” said a top official source.

 

Finance minister Prafulla Chandra Ghadai expressed discontent over the coal royalty hike, terming it as ‘unsatisfactory’.

“The state government will not gain significantly from the coal royalty revision. We would have been benefited if the royalty rate was fixed at 30 per cent. The demands of coal bearing states have not been considered by the Centre. This is a token hike that will only benefit the coal mining companies. It is unfortunate that the Centre has bowed to the pressure of the mining lobby,” Ghadai said.

However, Niranjan Pattnaik, president of the state Congress unit welcomed the move. “The royalty hike will benefit the state. The state government is needlessly crying hoarse over the issue. It has become the habit of the state government to oppose every move of the Centre.”

The CCEA on Thursday increased the royalty payout to states for coal and lignite, two raw materials crucial for power production. Royalty rates for the two non-ferrous minerals had not been revised since August 2007.

The rates have been increased to 14 per cent and six per cent ad valorem for coal and lignite respectively in a shift from the earlier graded and complicated system. Coal bearing states are expected to get an additional Rs 1,050 crore following the hike. Presently, states with coal reserves earn Rs 5,950 crore by way of royalty and this is expected to go up to Rs 7,000 crore.

West Bengal is the lone coal bearing state which would not benefit from the move as the state was already levying 25 per cent cess on coal, which the Centre felt was not justified.

Mineral-rich states such as Odisha, Jharkhand, Chhattisgarh, Andhra Pradesh, Tamil Nadu and Madhya Pradesh, had been lobbying for the shift to an ad-valorem based royalty regime for coal. The royalty for both the minerals was based on a formula consisting of an ad-valorem rate and a fixed component. While the fixed component depends on the grade of coal, the ad-valorem rate is calculated on the basic pit-head price and has been fixed at five per cent of the invoice price, excluding taxes and other levies.