Following is from Samaja epaper. It gives the reaction of Orissa on the mining policy recommended by the GOM.
The economic times reports that the new mineral policy has been announced. Excerpts are mentioned in another post. Here, we list it’s salient features.
The economic times states that mining areas will be auctioned for prospecting but the Telegraph says that Auctions mean global giants such as Posco and ArcelorMittal will not be allowed to negotiate for leases with Jharkhand and Orissa on the basis of plans for units in these states. Of course, this statement is speculative. But the states need to be careful before agreeing to this proposal.
Perhaps, We will have to wait and watch for the final notification on the policy.
Following are excerpts from the Economic Times report on this:
A GROUP of ministers (GoM) on Friday cleared the National Mineral Policy that retains the freedom of mining companies to export iron ore without restrictions on quantity or quality. …
The decision also clears the cloud over Posco’s proposed steel project in Orissa that has proposed to export some portion of ore from its captive mines. The company has proposed the exports to enable it to import high-grade ore required for mixing.
However, in order to facilitate value addition within the country and boost steel production, the new policy has given more powers to the state. The state governments will be able to give preference to companies undertaking value addition within the state while allotting iron ore mines. This will mean standalone mining activities will be disincentivised. However, the entire country will be treated as one economic region and states will have to permit transfer of ore outside the state if no one is willing to put up a plant there.
Moreover, the GoM has decided that a balanced policy will be followed while granting captive iron ore mines to steel companies. The policy will, therefore, provide captive mines to all steel units in operation up to July 2006 . It will also benefit the states as under the new policy, the present system of specific rate royalty will shift to ad valorem rate of 7.5%. Once notified, the proposal will increase royalty earnings by almost six times. For example, royalty earnings from iron ore of five ore producing states work out to Rs 250 crore. This will increase to Rs 1,250 crore under the new regime.
However, the new policy will also clip some of the powers of the states. The states sitting over mining applications of companies will be penalised as delays will transfer their powers to the Centre.
Another important aspect of the new policy is that a process of competitive bidding can be initiated for allocation of captive coal blocks. This is presently done by a screening committee within the coal ministry. The bidding process will also be started for all other major minerals.
Besides, the government will auction mining areas where full prospecting has to be done. This will require amendments to the Mines and Mineral (Development & Regulation) Act, 1957, that is likely to be introduced during the monsoon session of Parliament.
Under the new policy, companies will have to earmark 3% of turnover for undertaking rehabilitation and resettlement of displaced people under a sustainable development model. However, the ministry of environment and forests will work out fresh guidelines separately to introduce environment-friendly mining practices in the industry.
Livemint reports that Paradip port has floated tenders for coal and iron ore berths. Following are some excerpts:
Paradip port plans to build a Rs387 crore 10mt capacity berth for handling imported coking coal used for firing steel plants and another Rs505 crore 10mt capacity berth for handling iron ore export from India. When fully operational, the two berths will have deep drafts of 16 metres capable of handling ships of 125,000 tonnes initially and later 185,000 tonnes. …
Paradip port currently operates a 4mt capacity iron ore berth that handled 6.5mt of iron ore in the 12 months to March 2007. “Customers who take coal through Paradip port are allotted only 10mt by the coal ministry. Unless, we are given more, we cannot handle more,” says Raghuramaiah. The coal linkages for each customer are allocated by the coal ministry. Coal is shipped from Paradip to Ennore and Tuticorin ports for customers such as Tam.
On the ongoing tussle to make MCK comply with R & R policies MP Dharmendar Pradhan has compared MCL’s hirings with other similar companies hirings. New Indian Express gives a report on this and we give some excerpts from that report.
The average annual production of coal in Eastern Coalfields Limited (ECL) is 30 million tonne with a workforce of 1.02 lakh; with 95,000 manpower, the annual production of Bharat Coking Coal Limited (BCCL) is about 23 million tonne, and Central Coalfields Limited (CCL) has nearly 90,000 workforce to produce 32 million tonne.
Similarly, the Western Coalfields Limited (WCL) has about 70,000 employees with an annual production of 42 million tonne. The South Eastern Coalfields Limited (SECL) is the largest producer of coal with annual production of 88 million tonne and has 80,000 workforce.
On the other hand, MCL, the second largest producer of coking grade coal in the country with average annual production of 80 million tonne, has given jobs to 20,591 people. The company has been facing resistance from the locals for its poor policy on resettlement and rehabilitation.
MCL’s Chairman and Managing Director Aviram Sharma was caught on the wrong foot when Dharmendra Pradhan, MP, sought to know from him the manpower position in other subsidiaries of Coal India vis-a-vis their production at a high level meeting here on Thursday. The meeting was convened to discuss the contentious issue of R&R policy in MCL areas.
Pradhan told the meeting that there are nearly 5,000 rightful claimants for compensatory job in MCL. Besides, MCL is not doing a favour to them as they have already lost their land and livelihood, he argued.
Revenue Minister Manmohan Samal, who presided over the meeting, directed MCL and NTPC to implement the policy and report it every week on the progress.
Now, just because MCL employs less it does not become a bad guy. But, if must follow the R & R policies and also keep its promises. Moreover, it should consider the action by Central Coal Fields to set up an engineering college in Jharkhand. Following is an excerpt from the Business Standard article that reported on this.
The Jharkhand-based public sector Central Coalfields Limited (CCL) has established 68 schools in various parts of its working areas of different standards besides financial and other infrastructural help to 195 schools situated in and around CCL command area.
CCL has recently decided to establish on engineering college for the benefit of the people of Jharkhand.
CCL spent over Rs 1042 crore on social overhead onwards 1998. It had constructed over 160 km of heavy duty coal transportation roads. 300 km of approach road and equal length of colony roads, 6 major bridges on river Damodar, 59,455 permanent houses, 19 hospitals besides water supply schemes covering over a population of 5.02
lakh. CCL is also one of the major employers in Jharkhand.It has 62,827 employees on the roll of which 35 per cent belonged to Schedules caste and Scheduled tribes.
The company is also one of the major contributors to state exchequer. The state has earned over Rs 2811.56 crore of royalty and other taxes from CCL?s mining activities after the constitution of Jharkhand state. …
In the financial year 2006-07, CCL has constructed/repaired 35 km new roads in nearby villages in its command area. Over and above, CCL is to organise 215 health camps for various specializations during this financial year.
Statesman reports that the Orissa government has asked MCL to provide jobs to displaced people. Following are some excerpts from that report.
The state government today directed Mahanadi Coalfields Ltd to provide jobs to all those affected or displaced persons within four weeks and also asked other PSUs ~ NTPC and Nalco ~ to furnish weekly progress reports on rehabilitation measures. The decisions were taken at a high level meeting convened by revenue minister Mr Manmohan Samal here today. …
Mr Samal today directed that all categories of land losers and affected persons ought to be provided with employment within four weeks. Interestingly, he is also believed to have told the Central PSU that they should go by the Land Acquisition Act and not the Coal Bearing Act. The implementation of Coal Bearing Act had created problems since much of the land was notified but lying unacquired physically for several years. In the process, the land owner was unable to either sell or do anything with the land. With regards to employment of affected persons, it is learnt that the contentious issue relates to what is categorised as “C” type affected persons. These were people who had lost their land practically and not their homestead land.
Coal royalty rates had not been revised in India since 2002. Financial Express in one of its earlier news item mentions that it is expected to be revised every three years. The delay in its revision resulted in big losses for states like Orissa and Jharkhand. Today’s news of the revised coal royalty rates is a big relief, albeit temporarily. Following are some excerpts from a report in Telegraph.
The cabinet committee on economic affairs today approved an average increase of 14 per cent in the coal royalty paid to state governments. …
“The producing states were demanding an increase in the rates as royalty on coal had not been revised since 2002,”Chidambaram said.
He added that the increase in revenues for the states, barring Bengal, would be 24 per cent for coal and 27 per cent for lignite. “The revenues of the coal-producing states will increase to Rs 3,718 crore from Rs 3,000 crore,” he said.
Following are excerpts from a Hindu report which mentions how much more states like Orissa and Kharkhand will get and the rationale behind the increase.
In a further explanation of the rationale for revision, Mr. Chidambaram said: “It is contended [by States] that while coal companies have been revising the prices frequently and since the royalty rates are fixed on tonnage basis, the benefit of higher prices has not been shared with the producing States. Consequently, the share of royalty as a percentage of coal prices has declined.” …
As for the increase in revenue for the coal producing States, it would be Rs. 152 crore for Jharkhand, Rs. 133 crore for Madhya Pradesh, Rs. 105 crore for Andhra Pradesh, Rs. 98 crore for Chhattisgarh and Rs. 90 crore for Orissa, Rs. 89 crore for Maharashtra and about Rs. 43 crore for Uttar Pradesh. In the case of Tamil Nadu which produces lignite, the State Government could expect the revenue from higher royalty to go up by Rs. 28 crore to Rs. 130 crore.
Although, this overdue increase is a welcome step, to address this for the long term the royalty calculation must change to ad valorem basis which automatically reflects the change in the market price and thus minimizes the need to depend on the center for an increase in the rates. In particular, ad valorem royalty rate of coal means that the royalty rates will move with world coal prices. Hindu Business line has an article related to this.
Business Wire reports that Invensys Process Systems has been selected by Shandong No. 3 Electric Power Construction Corporation (SEPCO III) of China to implement Foxboro I/A Series distributed control systems (DCS) for a 3,600-megawatt generating station being built in Jharsuguda. Following are some quotes from that report.
Extensive Invensys experience in the power industry (including a large number of projects in China) and expertise in large-scale projects were important factors in the SEPCO III contract award to Invensys.
The DCS contract will encompass an advanced I/A Series automation infrastructure integrating more than 63,000 I/O points. The systems will be used to control the new plant’s boilers, turbines and generators utilizing Invensys’ Performance Plus coordinated control system (CCS) technology, well-proven in power plants worldwide. Subsystem applications will include data acquisition system (DAS), furnace safety supervisory system (FSSS), boiler and turbine sequence control system (SCS), turbine digital electro-hydraulic (DEH) control system, feed water pump mechanical electro-hydraulic (MEH) control system, and electric control systems (ECS).
In addition to I/A Series automation hardware and software, Invensys Process Systems China will also provide a range of installation services, engineering, training, and field service.
The plant is part of the “Power for All” initiative, an aggressive Indian government plan to sustain economic growth with significant additions of power generation capacity in the next few years. The new power plant project is one of the largest projects for SEPCO III, and comprises China’s largest export machinery and equipment order to India.
About Shandong No. 3 Electric Power Construction Corporation
Shandong No. 3 Electric Power Construction Corporation (SEPCO III) is part of Shandong Electric Power Group Corporation and is a leading power EPC contractor for thermal plants, nuclear plants, gas-fired and hydropower stations. SEPCO III was one of the first Chinese power contractors to enter the global market, and has more than 160 generation units of contract experience in China and around the world, including a range of public power and captive power projects in India. Capable of providing the full range of EPC services from its experienced professional staff, SEPCO III is headquartered in Shandong, China.
About Invensys
The Invensys Group (www.invensys.com) is headquartered in London and is listed on the London Stock Exchange, with approximately 30,000 employees working in 60 countries.
I think this is a part of one of the Power MOUs signed last october.
Last week transportation of coal from Mahanadi Coalfields Limited came to a grinding halt and NALCO and NTPC Talcher that depend on that coal got into a critical situation. Following are excerpts from a Newkerala news report that mentions why MCL got into that situation.
Sources said the land losers of Zillinda, Kandhal and Solod affected by Ananta and Bhubaneswari mines stopped Ananata, Jagananath and Bhubaneswari open cast mines and close down the concerned project officers’ offices since yesterday demanding the promised job to the oustees by Mahanadi Coalfield Limited (MCL).
The villagers alleged that MCL authorities did not meet their commitments to provide 80 jobs to them till date forcing them to go for strike.
Similarly the land oustees of Kandhal marched to Lingaraj mine linked to NTPC-kaniha yesterday and stopped the output protesting the non-availability of employment to them as promised by Lingaraj authorities.
Coal transportation from Hngula and Balaram mines had been hit for the last four days due to the road blockade by Soloda villagers demanding jobs.
Angul Collector Girish S N said the authorities were monitoring the situation and senior officials dealing with land acquisition and rehabilitation had been rushed to troubled areas to negotiate with the agitating villagers.
Kalinga Times reported on a letter that CM Naveen Patnaik wrote to the PM on this issue. Following are some excerpts:
In a letter to Singh on Monday, the Chief Minister said that MCL should continue supplying coal to National Aluminium Company (NALCO) and National Thermal Power Corporation (NTPC) to help these industries continue uninterrupted power generation.
Blaming the MCL authorities for not extending the rehabilitation and resettlement benefits to the people affected by coal mining, Patnaik said the public sector undertaking should go as per the State’s R&R policy as the Centre was yet to adopt a new policy in this regard.
Extending R&R benefits to the families affected by the operations of MCL will go a long way in improving law and order situation in the region, Patnaik said.
In recent months there have been reports regarding how some R & R issues with respect to Hirakud dam oustees and SAIL Rourkela still remains unresolved after several decades. It seems that many public sector companies with their central government connections are arrogant and have not done R & R properly. As a result people do not trust R & R promises made by anyone (private or public companies) and as a result various projects that could help Orissa get out of the bottom, are getting inordinately delayed.
The Economic Times reports the allocation of coal blocks in Orissa to various power generation companies across the country. Following is an excerpt from that report.
The Damodar Valley Corporation (DVC) has been allocated Saharpur Jamarpani block having 600 MT reserves in Jharkhand and two blocks in Manoharpur with 531 MT in Orissa for the Orissa Power Generation Company (OPGENCO).
The Naini coal block in Orissa (500 MT) has been allocated to Gujarat Mineral Development Corporation and Pondicherry Industrial Promotion and Development Corporation, the official said.
Moreover, two blocks at Chandipara in Orissa (1,589 MT) has been allocated to Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd, CMDC and Maharashtra State Power Generation Company, the official said.
He said the Baitarani West block in Orissa (602 MT) has been allocated to GPCL, OHPGCL and KSEB while Mandakini B block also in Orissa (1,200 MT) has been allocated to Tamil Nadu Electricity Board, Assam Mineral Development Corporation, Meghalaya Mineral Development Corporation and Orissa Mining Corporation Ltd.
The above allocation is done by the Coal ministry in Delhi. Although the coal mining will add to Orissa’s revenue through royalty, a big concern is the low rate of royalty fixed by the center which also does not change as often as it should. Some reports on this were published in Financial Express and other papers. Following is Orissa government’s stand on this issue and the issue of compensation on thermal power generation.
Revision of rates of royalty on coal and other Major Minerals on Ad valorem basis.
Orissa is a mineral rich State, but it does not get non-tax revenue in shape of royalty from such major minerals in the State to the desired extent as the rates of royalty are not being revised in time. The 12th Finance Commission have recommended that the rate of royalty should be revised on ad valorem basis. But the Government of India has not yet done it. In the past, the rate of royalty on coal and other minerals was revised on expiry of more than 5 to 7 years though the rule stipulates that there should be revision after expiry of 3 years. The delay in the revision of the rate of royalty in coal and other major minerals has caused a loss of Rs.150.00 crore per annum. The State has suggested royalty on ad valorem basis.
Compensation on Thermal Power Generation.
Orissa has a vast coal deposit. Orissa is a power surplus State and it exports power to other States. Since, electricity duty can be charged on consumption only, the importing state benefits while the exporting state has to bear the negative externality such as environmental degradation due to mining etc. This tantamounts to transfer of resources from the producer state without any compensation for the huge negative externality as well as depletion of its natural resources. If 1000 MW power is generated in Orissa and evacuated, the importing State gets electricity duty to the extent of Rs.100 crores, while the State in which the power is produced does not get anything. This situation has to be altered by either allowing the State to levy duty on generation or else mandate that a percentage of power generated should be given free of cost to the State by the Central Public Sector generating companies as is the case in Hydro Power Generation.
Following is a collection of links that I earlier compiled under the heading “Orissa mining and industries.”
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