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Ordinance ‘tweaked’ to favour Goa mining barons?

In a significant departure from existing norms, the Modi Govt. has apparently changed the cabinet note for bringing “Mines and Minerals ( Development and regulation ) (Amendment) Ordinance 2014”, to bail out the mining barons of Goa.

Incidentally this  was done informally as the original cabinet note differs with the ordinance and the changes pushed through at the last minute has no official record.

The govt. of India announced that all iron ore deposits will be auctioned for fresh lease. This ordinance has extended a special moratorium to the powerful mining barons of Goa by incorporating a provision “which allows a  grace period of 5 years to leases which are more than 50 years old before they come up for fresh bidding. The grace period has been extended to 15 years in the case of some captive mines.” The grace period will benefit the Salgaocars, Timblos and Chowgules.

The present Defence minister Manohar Parrikar has very strongly advocated this special privilege to them. But, what is interesting is that the formal cabinet note which was  presented to the cabinet does not contain those provisions and these concessions were later incorporated “informally”.
According to a senior govt. official,  when a ministry prepares a draft note for the cabinet,it is sent to other related ministries for  consultations. After incorporating their views the final cabinet note is then routed to the cabinet secretary.

When the final note on this ordinance was presented to the cabinet, Defence Minister Parrikar apparently raised serious objections. Some final provisions were added to the ordinance which has no official record. While the Goa government is busy renewing the mining leases it  has already committed to, in Odisha the government has started the process of cancellation of leases of some companies. Both states that earn a significant portion of their revenues from mining, are racing against time to beat the possible promulgation of the ordinance introducing auction of minerals critical to steel, aluminum and cement makers.

The Mines ministry in a report pointed out that production in the mineral sector had dipped from 218 mt at its peak in 2009-10 to 152 mt in 2013-14. It had argued on the urgency of an ordinance. With no formal announcement on the Cabinet's decision,  speculation is mounting over the outcome of last Monday meeting.

To ease migration to the new regime and with the larger economic interest in mind, the ordinance allows a grace period of five years to leases which are more than 50 years old before they come up for bidding. The grace period is 15 years in case of some captive mines.  Last Monday even as the Modi cabinet met to discuss the ordinance, the Odisha government, headed by chief minister Naveen Patnaik, announced it would auction all future leases. Since then it has moved to deny renewals on the basis of Section 8(3) of the Mines development act, to 18 such mines, including one of Tata Steel, Stemcore, Mesco and a couple belonging to the Rungta group.

Section 8(3) of the MMDR Act allows the government to certify that the grant of a lease was in the interest of mineral development. The Odisha government has now asked representatives of these companies to explain why their mining leases should not be cancelled.

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