New Delhi | Feb 18, 2015: It's an age-old question that has bedevilled India: Who owns its natural reserves, the Centre or the state where the reserves are located? The ministry of mines leaves no doubt as to who has ownership. A paper, "Mineral concession system", on its website unequivocally says, "The state governments are the owners of minerals located within their respective boundaries."
The states, however, think otherwise. With the mining ordinance relinquishing the last word on how the states will use their ownership rights to the Centre, the order has raised new questions on the Centre-state relationships. Many are asking if the rights of the states have been diluted by the ordinance.
Several states, including Odisha, are critical of many of the provisions in the ordinance. Passed last month, the ordinance has extended the lease for mines pending renewal by 15 years in case of captive mines and five years for others. The extension of lease means the states have lost the money they would have otherwise made by rebidding the contract after its expiry in the normal course.
"We are pained by the fact that these provisions were not there in the draft proposal that was circulated, and have been incorporated in the final ordinance without consulting the state governments," says Prafulla Kumar Malik, minister of state for mines, Odisha.
Another sore point with the states is the modifications to the method of granting concessions. The ordinance has added 12 new clauses in the central government's powers to make new rules for the sector. Many of these additions were open for debate in the draft mining bill.
For instance, all mineral concessions can now be granted only through auctions. However, while the state governments will conduct these auctions, the Centre will set the terms. States say this move, while bringing uniformity to the contract process, has curtailed the freedom that they enjoyed until now.
"The states adopted discretionary practices for grant of leases which changed from time to time," says Kameswara Rao, leader (energy, utilities and mining), PricewaterhouseCoopers. "Now, the states will be auctioning the mines according to the template set by the central government," he adds.
Has the ordinance made the Centre too discretionary? Apart from setting the deadline for various stages of contract, from processing of application to grant of mining lease or prospecting licence, the Centre can also reserve any mine falling in any state for a particular end use. Also, the Centre will now prescribe the terms for non-exclusive reconnaissance permit, or the licence granted by states to explore the mineral potential of a region.
The ordinance changes the relationship between the Centre and the state in other ways too. In order to make doing business easier, the ordinance says miners can transfer the mine they have won through competitive bidding if they don't seek to develop it further after getting an approval from the state. However, here too, the terms will be prescribed by the Centre. If the states fail to respond to the transfer notice within 90 days, their silence will be taken as a yes. The ordinance also allows mining companies to approach the Centre directly on any issue with the state if the state fails to take a decision on their grievances within a certain period. In that case, the central government can unilaterally take a decision without consulting the state.
The ordinance, however, has also brought about several noteworthy changes. For instance, under Section 20A, the Centre can issue directions to the state on matters related to "conservation of mineral resources, or on any policy matter in the national interest", including waste management and maintaining ecological balance.
"This is necessary to ensure a consistent approach is followed in the country towards conservation, and for gathering geological information. It makes sense to have a consistent national approach on these issues," says Rao. "This does not usurp the state's rights and, on the contrary, only helps states attract investment and good practices," he adds.
With a view to sharing the profit from a mine with the locals, the ordinance has proposed setting up a district mineral foundation, whose functions will be decided by the state, but the Centre will suggest the percentage of royalty to be shared. While this will not exceed 33 per cent, many states are already up in arms. Odisha has threatened to go to court and Goa has demanded clarifications on several provisions of the ordinance. The states and the Centre may be in for a protracted power struggle.
(Source: http://www.business-standard.com/)