'Scrap mining lease extension provision'

New Delhi: Odisha today demanded scrapping of the mining lease extension provision in Mines Ordinance, saying such extensions will deprive states of crucial financial resources.

"As the existing leases have no vested right for second and subsequent renewal and considering the fact that they have already enjoyed the largesse of mineral concessions for more than 50 years, the state government has decided not to grant second or subsequent renewal," Odisha Mines Minister Prafulla Kumar Mallik said here.

Participating in a meeting between state mines ministers and the Centre on the Mines and Minerals (Development and Regulation) (Amendment) Ordinance, 2015, he said that auction of leases would have provided much-needed fiscal resources to the state government for funding the welfare and developmental activities.

"However, we are deeply disappointed and distressed to note that the government of India has inserted an amended section 8 and a new section 8A in the MMDR Act to extend the validity of all existing leases, including those under second and subsequent renewal," he said.

The Mines Ordinance provides for five years extension for non-captive leases and 15 years for captive leases. Besides, the provisions for renewal of lease at the end of 30 years and thereafter every 20 years has been omitted and replaced with extension validity of leases for 50 years.

"We are pained by the fact that these provisions were not in the draft proposal circulated for consultation with the state governments and have been incorporated in the final ordinance without, at all, consulting with states," he said.

Section 8 and Section 8A will benefit a very small group of very high net-worth individuals who have exploited the mineral wealth of the country for at least 50 years by obtaining leases without going through a transparent process, Mallik alleged.

"There is no justification in giving them a licence for continuing to get from richer to even more richer in the next five years by shutting the gates for new aspirants awaiting participation in mineral concessions through auction route while sharing the benefits with the state exchequer," he said.

These provisions substantially and effectively take away the revenue benefits which were expected to accrue to states in next five years from auction of major minerals and negates the spirit of ordinance to bring about transparency in the settlement of major minerals.

"The period of validity of lease should be retained at the existing level of thirty years with a maximum of one renewal for twenty years," he said.

The Minister also said commitments made to companies such as Posco should be honoured in the new dispensation which, otherwise, would send a wrong signal to international investor community.

He also demanded that amount payable to District Mineral Foundations should not be less than the equivalent of royalty.

The Ordinance caps the contribution at one-third of the royalty.

"State governments should also be empowered to levy cess on major and minor minerals as these resources belong to the respective state government," he said.