Indian coal ministry considering royalty share - Report

Tuesday, 06 Dec 2011

Live Mint reported that the Indian coal ministry is considering a change in a forthcoming legislation that could lead to an increase in the price of the fuel for end users.

The change relates to the way benefits are to be passed on to the local community by miners such as Coal India Ltd and Singareni Collieries Co Ltd, which sell the commodity in the open market.

The draft Mines and Minerals (Development and Regulation) Bill requires them to give the people affected by mining activities 26% of profit.

The ministry wants that to be changed to a share in royalties, according to two senior government officials with direct knowledge of the matter. Both spoke independently of each other and declined to be named. They said, however, that a final call had not been taken on the issue.

One of the two officials said that the coal ministry is of the opinion that a royalty share could be passed on to users, leaving profit intact. The official said that “If companies are asked to share 26% profit, it directly impacts their bottom line. Royalties, on the other hand, were pass through.”

Both officials said such a move was unlikely to alter the money that the communities would get.

The Union cabinet approved the draft Mines and Minerals (Development and Regulation) Bill on September 30th. While it stipulated a 26% profit share for coal mining companies, non-coal miners are required to share royalties.

A group of ministers approved the draft Bill in its current form on 7 July. The original version had sought a 26% profit share for non-coal miners as well.

Following this, in October, the coal ministry had written to the finance and mines ministries, suggesting that captive coal miners also be asked to share profit along the same lines as companies selling the fuel in the open market.

(sourced from Livemint.com)