New profit-sharing rule: minister backs PSUs’ bid for special treatment

The steel ministry on Monday said it will seek special concession for state-owned companies like Steel Authority of India Ltd (SAIL) and National Mineral Development Corporation (NMDC) from the 26 per cent profit-sharing rule proposed in the draft mining bill framed by a group of ministers (GoM) a few days back, arguing that the firms have already been meeting several social obligations.

"Some special consideration has to be given to PSUs for the historical role (in social obligations) being undertaken in different parts of the country," steel minister Virbhadra Singh said on the sidelines of the inaugural session of International Federation of Consulting Engineers. The minister, however, said he was not in favour of complete waiver from the proposed rule.

Singh's statement comes days after the GoM headed by finance minister Pranab Mukherjee agreed to give go-ahead to the draft mining bill, which requires miners to share 26 per cent of revenue with local people affected by their mining projects. Singh is also a part of the GoM.

The draft mining bill has now been sent to the mines ministry for fine-tuning some of its proposals before being considered in the next meeting of group of the GoM. Following this, the bill would be placed in Parliament during the upcoming winter session. The new bill seeks to fast-track approvals for mining rights while being transparent, and thus attract private investment.

The proposed bill provides for creating a fund, to be called the 'district mineral foundation', for benefiting the locals. It also seeks to compensate the people affected by land acquisition by paying them an amount equal to the royalty given to state governments in case the mining company is non-functional or in losses.

While the entire industry is opposed to the profit-sharing policy, claiming that it will throttle investments, SAIL's opposition seems to have made an impact. SAIL chairman C S Verma had said on Saturday there were practical issues in implementing the proposal, as ascertaining profits from mining for an integrated company like SAIL was difficult.