Steel ministry seeks easier profit sharing norms for PSU miners
Barely three days after a group of ministers (GoM) approved the new mining bill, steel minister Virbhadra Singh, who is part of the GoM, said on Monday that some concessions may have to be given to state-owned firms like Steel Authority of India Ltd (SAIL) and National Mineral Development Corporation (NMDC) from the 26 per cent profit-sharing rule.business Updated: Sep 21, 2010 03:55 IST
Barely three days after a group of ministers (GoM) approved the new mining bill, steel minister Virbhadra Singh, who is part of the GoM, said on Monday that some concessions may have to be given to state-owned firms like Steel Authority of India Ltd (SAIL) and National Mineral Development Corporation (NMDC) from the 26 per cent profit-sharing rule. The Bill is high
“Some special consideration has to be given to PSUs for the historical role (in social obligations) in different parts of the country,” Singh said.
While the entire industry is opposed to the profit-sharing policy, claiming that it will throttle investments, SAIL’s opposition on Saturday 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.
“Captive mines should be kept out of its (the new legislation’s) purview. We are not selling what we mine. It is for our captive use,” Verma had said.
Though Singh said he was not seeking complete exemption for PSUs, even the preferential treatment for which he is rooting is likely to come under severe criticism as some private companies like Tata Steel have a very good track record on corporate social responsibility (CSR) schemes.
“This is a very confusing signal from the government,” a private miner said on the condition of anonymity. “What concessions is the government looking at and what are the yardsticks? Is it saying only PSUs are involved in CSR and everybody else is robbing the society?”
Tata Steel also indicated practical problems. “The proposal to ... is laudable,” said Partha Sengupta, vice-president, raw materials, Tata Steel. “But the social cost must be a part of the cost of operations and not derived as a share of the profit.”
“When profit is is treated as a part of the operating cost, it will be consistent, transparent and sustainable through the life of the mine. The quantum can be decided on similar lines of royalty,” he added.
“Most miners in the country are unlisted and it is easy for them to find loopholes in the system or fudge their books to show lower profits and/or losses,” said a prominent private steelmaker said. “Any new policy should look into these aspects as well and not merely penalise those who want to operate in a transparent manner,” he added
The bill has been sent to the Mines Ministry for fine tuning and the final draft will be placed before the Group of Ministers (GoM) at its next meeting. It is likely to be placed in the Winter session of Parliament.