Miners may get royalty exemption and 70% price for remaining e-auctions
SANDESH PRABHUDESAI, PANAJI | 25 March 2016 23:01 IST
Goa government is planning to give three major concessions to the mining lease holders to purchase their own ‘illegal’ iron ore, at e-auction.
If the lease holder successfully bids for the ‘illegally extracted’ iron ore lying at its own lease property, no royalty would be charged on its export.
In addition, the price would be slashed to Rs 350 per metric tonne, against the existing price of Rs 500.
A proposal in this regard has been moved by the mines department to the government, seeking financial approval.
However, much before the approval, Chief Minister Laxmikant Parsekar appears to have presumed a deemed approval.
In the recent budget, he has shown estimated revenue of only Rs 40 crore, from the 80 lakh MT of iron ore lying at different lease properties and ‘confiscated’ by the government, terming it ‘iilegal’.
Records of e-auction on the website of mines department show that the state treasury had earned Rs 591 crore by selling 86 lakh MT of iron ore through 14 e-auctions held so far, at the minimum price of Rs 500 per metric tonne.
Confirming the figures, mines director Prasanna Acharya says the price for the remaining iron ore in fact is estimated at Rs 300 per metric tonne.
“Most of the processed quality ore has already been lifted by the bidders in the last 14 e-auctions. What’s remaining now is unprocessed ore, which may not get price of more than Rs 300 per metric tonne”, he told goanews.com.
In some of these 14 e-auctions held so far, the bidders had even paid double the price than Rs 500, state the records.
While the e-auction of this ore would fetch only Rs 240 crore, the government needs to pay Rs 250 per metric tonne as the extraction cost to the lease holder, as per the Supreme Court directive.
As a result, the state treasury would be left with only Rs 40 crore.
However, this estimated figure may reduce further by Rs 6 crore if the government agrees to the proposal of mines department to pay back the royalty if the same lease holder successfully bids for the ore lying at its own lease property.
According to Acharya, ‘illegal’ is a technical term used by the court since it was extracted after 2007, when the leases were not renewed.
“But we had recovered royalty from the lease holders for this ore and legally we cannot recover the royalty twice from the same lease holder for the same amount of ore”, he said.
Secondly, the proposal moved to the government also suggests that the price of the ore may be reduced to Rs 350 per metric tonne since no bidders are coming forward anymore, citing reason of price of Goa’s low quality ore crashed in the international market.
In fact he also plans to move yet another proposal to pay back the amount of royalty, in the cases of e-auctioned ore purchased by the same lease holder in the last 14 e-auctions.
“We have asked for a data from the bidders. Once verified, we will also move this proposal”, said Acharya.
Goa’s mining lease holders have already been exempted export duty by the centre while the state government has reduced local fees and taxes by almost 95% for the fresh ore they would now extract or export.
In contrast to the ore in the possession of the government, budget document shows that Goa would earn Rs 435 crore as royalty this year from the fresh ore the miners would extract.
This royalty is calculated at the rate of 15% for the 20 million MT of ore, the capping fixed by the Supreme Court, which the mining lease holders are expected to extract and export in this financial year.
It means the government would earn more from 15% royalty on fresh ore of the lease holders than the ‘illegal’ ore, which is in possession of the state government.
And the mining industry would benefit on the whole mining activity, if pending proposals are approved, as following:
1. No export duty on export of iron ore.
2. Hardly 5% state taxes or fees on the ore extracted afresh.
3. All fresh e-auctions would be at the rate of Rs 350 per metric tonne and not Rs 500.
4. No royalty if the lease holder successfully bids for the ore lying at its own lease property.
5. Goa government would pay back the amount of royalty if the bidder for earlier 14 e-auctions was the same lease holder, from whom the state government ‘confiscated’ the ore.
Most of earlier auctioned ore was purchased by same lease-holders, so earlier paid royalty will be returned. No export duty, no royalty, 5% state taxes, etc. etc. for the illegal=lease holders. Director has failed to make one more proposal "Subsidy for auctioned ore (including earlier auctioned ore) @ Rs. 350 per tonne of auctioned ore, which can then be extended to fresh extracted ore and exemption from any suit for illegality.