Troubles could soon ignite for state-run behemoths having Vedanta-style joint ventures with private mining companies as the union mines ministry has decided to subject such JVs to intense scrutiny.
Asking the mineral-rich states to be transparent in selecting private partners for their mining companies,the ministry has issued a slew of guidelines that these states should follow for the same.
The move comes a day after Mines Minister B K Handique expressed concern on the back-door entry by the private mining companies by tying up with the PSUs. Also galvanised by the union environment and forests ministry’s decision to cancel the Orissa Mining Corporation’s bauxite mining rights in the Niyamgiri Hills in Orissa’s Lanjigarh district,the mines ministry has stepped in to ensure accountability from the states on such MoUs their PSUs have with private mining entities. In the draft guidelines the ministry pointed out that in case of reserved areas,if a PSU sought to enter into a JV with a private sector company to exploit a concession in a reserved area,the process of selection of such JV partner should be transparent and satisfy the norms set out in the Section 11(3) of the MMDR Act. The reason is that reservation in favour of a PSU should not be used non-transparently to grant benefits to a private sector company which may not be otherwise eligible under the Act.
According to the guidelines,reservation of areas for exploitation by the PSUs for grant of concessions would be subject to the condition that if the PSU did not exploit the mineral on its own and sought to execute it through a JV,then it will have to obtain prior approval of the Centre for the arrangement. It asked the states to issue a comprehensive circular specifying the policy and content outlining the procedures and consequences. In case the MoU/JV is treated as special reasons,it is necessary to make its provisions enforceable,and as such the state must send all its details along with a proposal to make it enforceable through application of the Rule 27(3) of the Mineral Concession Rules, according to the new guidelines.
Mandating the mineral-rich states to sign MoUs in conformity with their respective mineral policies in a fair manner,it suggested that there should be a clear policy by the states on the situations in which MoUs were signed which could include quantum of investment,introduction of latest technology,value addition and long term linkages. Signing a large number of MoUs indiscriminately,and without considering what the other party is bringing to the table is not compatible with the use of the MoU as Special Reasons, the ministry observed in the guidelines. Under the Special Reasons clause the states have been forwarding proposals of late applicants seeking the prior approval of the Centre for grant of mineral concessions.
Warning the state governments to scrupulously adhere to the first-in-time principle for non-notified areas the ministry,the guidelines specified that an MoU for exploration at a specific location in anticipation of a concession would be deemed incompatible with principles of fairplay and equity because it would give the MoU applicant an unfair advantage in relation to other MoU applicants applying for the same area. To prevent misuse of the MoUs/JVs,the states have been told to spell out the specific clauses pertaining to terms of the JV.