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Center Rejects Royalty Plea

New Delhi: The Government of India has finally turned down the Odisha Government’s long-standing demand for revision of coal royalty.  

Union Coal and Mines Minister Prahlad Joshi has informed this in the Rajya Sabha today in a reply to a question raised by senior BJD MP Amar Patnaik.

Shri Joshi said there is no proposal for enhancement of royalty on coal. For revision of the rates of royalty on coal & lignite, a Study Group was constituted on 21 July, 2014 for the purpose of examining the issue of revision of existing royalty rates on coal and lignite.

The Study Group inferred from the comments of the stakeholders that the coal producing States had suggested to increase the rates of royalty from existing 14% to roughly 20%, whereas the coal consuming stakeholders suggested to reduce the present rate of royalty from 14% to about 5-6%, he said.

“The Study Group after considering all factors had submitted its report suggesting no change in the rates of royalty, as after levy of District Mineral Foundation (DMF) @ 30% on royalty and National Mineral Exploration Trust (NMET) @ 2% of Royalty, effective rate is 18.48%. The suggestion of the Study Group was accepted by the Government,” informed the Union Coal Minister.

Dr. Patnaik asked Shri Joshi whether the Government is aware that this delay in revision is impacting the coal-bearing States such as Odisha, which are being deprived of a fair share of revenue from coal mining?

In his reply, Shri Joshi said, “There is no negative bearing on the revenues of States as the Royalty is levied @ 14%. Thus, as and when the coal price increases, the royalty to States automatically gets increased.”

Further, he said, due to consistent royalty rates the domestic coal production has increased sharply, which further increases royalty collection for States.

Earlier, Shri Joshi had informed the Parliament that the rates of royalty on minerals are revised from time to time under subsection (3) of Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957. Royalty rates were last revised on September 1, 2014.

In terms of Section 9(1) of the Mines and Minerals (Development and Regulation) (MMDR) Act, 1957, every mining lease holder needs to pay royalty for major minerals removed or consumed as per the royalty rates specified in the Second Schedule of the MMDR Act, 1957.

Officials say that as per Section 9 (3) of the MMDR Act Central Government shall notify the rate of royalty payable in respect of a mineral. Royalty is collected and retained by the State Governments concerned.

Presently, the rate of royalty on coal is 14 per cent (except the State of West Bengal). In case of West Bengal Royalty rates are fixed and range from Rs 7 to Rs 2.5 per Ton. The rate of royalty was last revised on 10 May 2012. 

The BJD Government has been fighting for revision of coal royalty since the Modi Government came to power. However, after a pro-longed delay, the proposal was rejected by the Centre.