Coal Ministry plans to halve interest on late payment of rent, royalty

In a bid to enhance the ease of doing business, the Coal Ministry wants to amend the rate of interest charged on late payment of rent and royalty from coal mines. 

The Ministry reviewed penal provisions in Mineral Concession Rules, 1960 (MCR) to identify violations which could be decriminalised and those for which the penalty can be reduced. 

Accordingly, the Coal Ministry has prepared the draft Mineral Concession (Amendment) Rules, 2022 seeking to amend the MCR and draft amendment in the notification for royalty on coal/lignite as per the second Schedule of Mines and Minerals (Development and Regularisation) Act, 1957.

It has also urged the public and stakeholders, including state governments to provide their views on the same by July 27

Reducing rate of charging interest

The Cente has taken various initiatives aimed at promoting ease of doing business. Decriminalisation of minor violations under various laws is another step in this regard so as to minimize the risk of imprisonment for entrepreneurs/ citizens for relatively minor violations, the Coal Ministry said in a notice.

“Accordingly, the Ministry has under consideration a proposal to amend Rule 64A of the MCR to amend the rate of charging of interest on late payment of rent, royalty and other such amounts as prescribed from 24 per cent to 12 per cent. However, the said interest would be charged from the date of expiry of the time period allowed by the State government,” it added.

Moreover, in order to impart clarity regarding adjustment of excess royalty paid to the State government, making incorporations in the existing Rule 64B is being considered. Also, since the royalty is to be charged on run-of-mine coal as provided for in Rule 64B, an amendment In the existing notification on royalty is also under consideration to bring it in alignment with Rule 64B, the Ministry explained. 

Reforming MCR

Coal Ministry has taken initiatives to revisit old laws with an aim to improve efficiency, ease of doing business and to open up the coal sector which would result in improving domestic coal production and reducing imports. In the present scenario of the coal sector, there has been dominance of public sector companies, both in exploration and mining of coal.

The age old MCR), 1960 was governing many aspects of coal mining and needed amendment in furthering the reforms and also due to several legislations coming into existence, such as those related to environment and forest conservation.

Considering the long gestation period of coal mines due to complexity of multiple laws and restrictive rules affecting entry of potential investors in the sector, the amendments to MCR 1960 aims to promote freedom of operations to encourage better participation.

For instance, with insertion of Rule 27A in the MCR, 1960, the lessees of captive mines are now allowed to sell coal or lignite up to 50 per cent of the total production in a financial year after meeting the requirement of the end use plant linked with the mine.

Besides, the Centre can through a notification, with the reasons to be recorded in writing, increase the said percentage of coal or lignite that may be sold by a government company or corporation beyond 50 per cent.

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