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Rs 30,000-crore project to undo damage by mining in Karnataka

Company to be set up by SC order to repair environment in 3 districts over 30 years with an initial corpus of Rs 4,000 cr

Mahesh Kulkarni  |  Bangalore 

The country's first programme to mitigate the adverse impact of mining on the environment - forests, wildlife and the local community -is set to take off in Karnataka soon. With the Supreme Court having given it the green signal on Friday, the state government will set up a company under Section 25 of the Companies Act, 1956 in a month with an initial corpus of close to Rs 4,000 crore.

The court, while rejecting the Karnataka government's plea for allowing it to set up a special purpose vehicle (SPV) under the Karnataka Societies Registration Act, ordered the state to set up a Section 25 company under the Companies Act. This company will formulate and implement projects under the Comprehensive Environment Plan for Mining Impact Zone (CEPMIZ), a senior official in the state government said.

"Karnataka will be the first state to undertake such a massive and ambitious environment project. It could become a model for replication elsewhere in the country," said Tushar Girinath, secretary, department of mines, Karnataka.

The Central Empowered Committee (CEC) of the Supreme Court, in its report dated February 3, 2012, had recommended the establishment of a special purpose vehicle for taking ameliorative and mitigative measures according to the CEPMIZ around the mining leases in the districts of Bellary, Chitradurga and Tumkur.

"As directed by the Supreme Court, we will have to form a Section 25 company within a month and start implementing the environment rehabilitation projects. This company will be in existence for the next 30 years and spend at least Rs 30,000 crore for repairing the damage done by mining to the environment in the three districts of Bellary, Chitradurga and Tumkur," Girinath said.

The SPV will implement not only afforestation programmes but also a whole series of development works in the areas of education, health, nutrition, water supply, employment and training, roads, minor irrigation, among others.

He said the company will be headed by the additional chief secretary and the development commissioner and include as members the secretaries of mines, forests, finance and revenue, among others. Also, senior officers from agriculture, horticulture, rural development, water supply, health, women and child development, education, forests and environment, mines and geology, and employment & training and industries, among others, will be members.

Besides, a nominee from the Federation of Indian Mineral Industries (FIMI) would represent the mining industry on the board. The court directed the maintaining of funds collected from mining firms in a separate account of the company and not to transfer it to the state treasury.

The payments received by the monitoring committee under different heads such as compensation payable for Category-B mining leases, sale proceeds of the existing stock of Category-C mining leases, 15 per cent of the sale proceeds of the existing stock of Category-B mining leases, 10 per cent of the sale proceeds of the existing stock of Category-A mining leases and 10 per cent of the sale proceeds of both Category-A and B leases after resumption of mining operations will be transferred to the company. The total amount so far collected amounts to nearly Rs 4,000 crore, Girinath said. The Comptroller and Auditor General of India will audit the accounts of this company.

"Setting up a special purpose vehicle as a company for the uplift of the mining region is a very good move. We welcome the apex court order and will work with the state government in carrying out projects for the improvement of health and socio-economic conditions of mining-affected people in the three districts," said Basant Poddar, senior vice-chairman, FIMI.

A Section 25 company has multiple benefits over a society registered under the provisions of the Societies Registration Act, in terms of structured governance, perpetual succession, transparency, and prevention of indirect control. It would also enable discrete maintenance of accounts and effective control over finances, FIMI said.

First Published: Sat, May 03 2014. 23:48 IST
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