Aug16 Exchange with 

Mr. Srikant Jena


 

1. My Query:

 Dear Sachi:

What Mr. Jena has presented seems to be shocking. But to understand the whole issue lets say focus on the TATAs for a moment.

Mr. Jena said:

>TISCO - This Company has mined about 20 million ton of iron ore in the
>last four years. It has minted at least Rs.3000 crore only from the
>iron ore it mined. The calculation has been made on the basis of
>average ex-mine market price of iron ore at Rs.2000 per ton. Just take
>away the royalty of Rs.26 per ton + mining cost of Rs.300 per ton.
>Adding other expenses, the cost of iron ore at ex-mine will be at best
>Rs.500 per ton. That means the company made a minimum profit of
>Rs.1500 per ton of iron ore.

Assuming the above calculation is true the main mistakes is to have
granted the lease to TISCO at such a low royalty proce.

The questions then are:

(i) Which government gave the lease to TISCO in the last 10 years? Which year?
(ii) Who decided on the lease price of Rs 26 per ton that you mention above?

If we know the answer we will know who to blame for this case and try to figure out how this can be avoided.

If Mr. Jena can kindly answer these questions that would really help.

best regards
Chitta

2. Mr. Jena's reply:

From: srikant jena <srikant_jena@hotmail.com>
Date: Aug 16, 2006 8:26 PM
Subject: RE: Prof Chitta Baral: What Mr Jena has Presented seems to be Shocking
To: sachisatpathy@gmail.com

Dear Mr Baral
The mininig lease to TATA was given by Maharaja of Mayurbhanj before
ibdependence  for 30 years first and then it was renewed for another thirty
years by the then Maharaja .After independence the mininig lease is being
renewed by subsequent govts  and new mines in Badbil area which is  one of
the best in the country has also  gone to them. IF ANY ONE TO BE BLAMED THEN
ALL THE GOVTS FROM INDEPENDENCE.

The second one is about Rayalty. Royalty is fixed by Union govt not by the
state govt.The royalty rate is applicable for the entire country.

The only thing which could have been done by the state govt is to impose
cess on the mineral over and above the royalty but it has not been done the
reason is best known to the present chief minister and also to  the previous
ones also. If the state of West Bengal can put the cess on mineral and get
lot of money then why not Orissa?   we deliberately allow the mines owner
not pay to state.

We get 1st or 2nd prize from the corporate controled news chanel and on the
basis of that can hypnotise the people and remain in power and that should
satisfy all.

Thanks.
Srikant Jena

3. My reply to Mr. Jena:

 Dear Mr. Jena:

Thank you very much for your reply. I tried to investigate further
and found the following information. As I am new to this, please correct me I am wrong.

(1) I found from a Loksabha debate in 1999
http://66.102.7.104/search?q=cache:jKvWo54OOscJ:164.100.24.208/debate/debtext.asp%3Fslno%3D6882%26ser%3D%26smode%3D+cess+on+mining+lease+west+bengal&hl=or&gl=us&ct=clnk&cd=12
which had the following as part of a statement made by Mr. Trilochan Kanungo.
I think it explains why Orissa and other states (except West Bengal) are not able
to put cess.

--------------
"... It gives rise to discord and disharmony between the Centre and States not because of other provisions of the Act but because of Section 9 and more particularly Subsection (3) where imposition of royalty, inclusion of Second Schedule to the Act, and the revision of royalty have been provided. A lot has been said about giving more power to the States. But, unless the power of fixation or revision of royalty is given to the States, it amounts to not giving any power to the States at all. Mineral bearing States had been suffering for a long time because of the existing provisions of the Mines and Minerals (Regulation and Development) Act, 1957. However, they have been somehow managing till 1991 when Justice Ranganath Misra, the then Chief Justice, gave his verdict in a case in Supreme Court declaring cess as ultra vires. Since then, the mineral bearing States have been suffering.

Sir, this Act of 1957 with the incorporation of Section 9 and Subsection (3), the law is not in conformity with the Constitution of India. It was a colourable legislation. It was beyond the power of Parliament to enact such a legislation. Even then it was passed by the Parliament and it has been followed by the entire country. No State had raised any question even with the Sarkaria Commission because they were imposing cess and somehow they were compensating for the loss caused by the royalty fixed by the Centre. The Sarkaria Commission, therefore, did not take note of all those things. Royalty on coal was revised in 1991. It was revised again in 1994. Though it was to be revised by October, 1997, it has not yet been revised. In 1991 it was revised for all States, In 1994 it was revised for all States excluding West Bengal and Assam. Cess in West Bengal has not been declared ultra vires because that cess law has been protected under Article 372 of the Constitution of India. That is the reason why they are not shouting over it. That is the reason why West Bengal people have not expressed their unhappiness as yet. But the other poor mineral bearing States have been suffering.

------------

Note 1: "ultra vires" means "beyond the power"
Note 2: Article 372 of the constitution allows some old laws/rules to remain in effect
          
The above explains why Orissa can not charge cess.
(Please correct me if I have wrong information.)

(2) Dear Mr. Jena: As you admit now all past governments are at fault for giving
lease or renewing lease with TISCO. Actually I found a list of all
mining lease (I think since independence) till 2005 and have stored it in the page
http://chitta.googlepages.com/mining-lease-list.pdf
So I now know who were the CMs when the leases were given, and that document
does not list Mr. Naveen Patnaik's government giving any lease to TISCO.
(Please correct me if I have wrong information.)


(3) Since many of the leases are still operational, I think we all should join
together to pressure the appropriate authority (in this case it happens to be
the central government) to increase the lease rate or allow Orissa to sets its own
lease rate or have something called a Ad Valorem rate. Various Orissa
governments (including the current one) have been trying for this but have
not been successful yet.

Please let us keep politics and misleading accusations out of this and
work together for mother Orissa. For all of us Orissa should come first
and party affiliations (if any) should come second.

best regards
Chitta