September 07, 2008

Orissa CM calls for ad valorem royalty on coal royalty

Mr Naveen Patnaik chief minister of Orissa, voicing his strong protest to the August 1st 2007 notification of the centre for revision of coal royalty, has demanded that the royalty be fixed on ad valorem basis.

In a letter to Dr Manmohan Singh prime minister of India, he said that the manner in which the centre is going to revise the royalty, the state will be a loser and as such Orissa has already sustained a huge loss because of 2 year delay in the revision. He urged the prime minister to compensate the revenue loss of the state and delete the provision of adjusting the cess collected by the state during payment of royalty.

He said that under the new hybrid formula, the state will get INR 10 more per tonne of coal which is nothing given the delay in the revision of royalty.

As per the Mines and Mineral Development & Regulation Act 1957, the centre is bound to revise royalty on coal and other minerals every three years. The Act provides that the state should be compensated accordingly for the delay in revision of royalty. The latest revision of the Act was made on August 1st 2007 after 5 years.

As per the Supreme Court ruling, the collection of cess by the state for the development of the people in the mining areas is justified.