By Nageshwar Patnaik
Bhubaneswar, January 14, 2015

Attack is rarely the best form of defense for a state seeking both transparency in leasing and developing its mineral resources.

By terming the Modi government’s act on the promulgation of the Mines and Minerals (Development and Regulation) Amendment Ordinance, 2015 as “undemocratic”, the ruling Biju Janta Dal (BJD) in Odisha has opened its Pandora’s Box.

“Our suggestions were ignored. The Centre unilaterally took the ordinance route to amend the MMDR Act. This is undemocratic. We also asked for taking the State into confidence while leasing out mines. The Centre closed its eyes to the suggestions from us,” BJD’s spokesperson Amar Prasad Satapathy commented on the Ordinance.

He further went on saying, ‘‘The Union government’s promulgation of an ordinance in haste is an impediment to the federal system. There is a need to make amendments to certain provisions of the Mines and Minerals (Development and Regulation) Act, 1957. A draft legislation was circulated to all mineral bearing states including Odisha and they have submitted their proposals before the government. At a time when the Centre is talking about strengthening the federal structure, it is unfortunate that the government has not taken the states into confidence and went ahead with the ordinance. A few days ago, a coal ordinance was introduced and now the mines ordinance. I don’t understand the urgency to bring such ordinance in hurry?’

The Naveen Patnaik government, however, last week decided in a cabinet meeting to auction the mineral resources followed by subsequent resolution knowing very well that it is beyond its power as the MMDR Act is a central Act and all the mining leases need to be approved by the Centre. All the policies, rules and regulation regarding the mineral exploration, exploitation and trade come under the purview of MMDR Act.

Experts dubbed the cabinet decision and came out with a resolution that is “illegal and legally untenable”.

“MMDR Act is a Central Act and the state has no role to play. Odisha’s cabinet decision and subsequent resolution now becomes infructuous after the Ordinance by the centre’, says former Director of Mining and Geology B K Mohanty.

At the same time, Mohanty points out that the Modi government could have waited for a month or two for the parliament to pass the Amendment. “Normally Ordinances are promulgated when there is some emergency situation. The Amendment to MMRD could have been taken up by the ensuing Budget session”.

The Naveen Patnaik government in the past had hurried though several resolutions in the aftermath of multibillion mining scam which opposition and mining industry termed as ‘panic reaction’.

They (BJD government) were unable to perform their duty. Proper utilization of natural resources was not done. Instead, mining scams happened in the state. The Center‘s ordinance will make mining activities transparent and auction money will be definitely used for development of the concerned district and state.” BJP leader Manmohan Samal said.

The former minister reiterated that till recently, there was no clarity in the MMDR Act as a result of which the development of these mineral-rich states was hampered. Several industries were lying defunct due to delay in lease renewal and subsequent renewals have also been affected by court judgments.

“As a result, the output in the mining sector has come down drastically. With the promulgation of ordinance, much clarity on the Act has come. Now, transparency will prevail and industries will function smoothly,’’ he said.

According to a government gazette published on Monday, the ordinance provides for granting mines for 50 years through a competitive bidding route, including e-auction.

‘‘In the MMDR Act there is provision for auction. For instance, when you are auctioning a house property or a piece of land, you know what the property is exactly. But in case of mineral property, one cannot ascertain the amount of reserve and quality from the surface. So, there should have been some additional provisions to garner some additional royalty,’’ Mohanty told “Bizodisha.com”.

The Ordinance empowers the Centre to prescribe terms and conditions and procedure for bidding which include production sharing or royalty payment or a combination of both. The Mines Ministry said it would ensure greater transparency and also an increased share for states from the sector.

Unlike in the 1957 Act, there would be no renewal of any mining concession. The tenure of mineral concession has also been increased from existing 30 years to 50 years. Thereafter, the mining lease would be put up for auction.

The mines, which are already granted before the ordinance, would also be deemed to have been given for a period of 50 years.

“Ordinance provides that mining leases would be deemed to be extended from the date of their last renewal to March 31, 2030 (in the captive miners) and till March 31, 2020 (for the merchant miners) or till the completion of the renewal already granted, if any, whichever is later.

Thus, no mining lease holder is likely to be put into any disadvantaged condition. It is expected that this would immediately permit such closed mines to start their operations,” the gazette notification said.